As filed via EDGAR with the Securities and Exchange Commission on April 22, 1996
File No. 811-5151
Registration No. 33-14196
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 35 |X|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Post-Effective Amendment No. 74 |X|
-------------------------------
MUTUAL FUND GROUP
(Exact Name of Registrant as Specified in Charter)
101 Park Avenue
New York, New York 10178
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(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code: (212) 492-1600
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Copies to:
George Martinez, Esq. Carl Frischling, Esq. Molly Sheehan, Esq. Gary S. Schpero, Esq.
BISYS Fund Services, Inc. Kramer, Levin, et. al. Chemical Bank Simpson Thacher & Bartlett
3435 Stelzer Road 919 Third Avenue 270 Park Avenue 425 Lexington Avenue
Columbus, Ohio 43219 New York, New York 10022 New York, New York 10017 New York, New York 10017
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
|_| immediately upon filing pursuant to |X| on May 6, 1996 pursuant to
paragraph (b) paragraph (b)
|_| 60 days after filing pursuant to |_| on ( ) pursuant to
paragraph (a)(1) paragraph (a)(1)
|_| 75 days after filing pursuant to |_| on ( ) pursuant to
paragraph (a)(2) paragraph (a)(2) rule 485.
If appropriate, check the following box:
|_| this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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The Registrant has registered an indefinite number or amount of its shares of
common stock for each of its series under the Securities Act of 1933 pursuant to
Rule 24f-2 under the Investment Company Act of 1940 on July 18, 1994 and
Registrant's Rule 24f-2 Notice was filed on November 27, 1995.
The Trustees of the Hub Portfolios have also executed this registration
statement.
<PAGE>
MUTUAL FUND GROUP
Registration Statement on Form N-1A
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a) Under the Securities Act of 1933
VISTA(SM) U.S. TREASURY INCOME FUND
VISTA(SM) BALANCED FUND
VISTA(SM) EQUITY INCOME FUND
VISTA(SM) GROWTH AND INCOME FUND
VISTA(SM) CAPITAL GROWTH FUND
VISTA(SM) LARGE CAP EQUITY FUND
VISTA(SM) BOND FUND
VISTA(SM) SHORT-TERM BOND FUND
VISTA(SM) GLOBAL FIXED INCOME FUND
VISTA(SM) INTERNATIONAL EQUITY FUND
VISTA(SM) SMALL CAP EQUITY FUND
VISTA(SM) U.S. GOVERNMENT SECURITIES FUND
VISTA(SM) AMERICAN VALUE FUND
VISTA(SM) SOUTHEAST ASIAN FUND
VISTA(SM) JAPAN FUND
VISTA(SM) EUROPEAN FUND
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Item Number
Form N-1A, Statement of Additional
Part A Prospectus Caption Information Caption
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Captions apply to all Prospectuses except where
indicated in parenthesis. Parenthesis indicate
captions for Institutional Shares Prospectuses
1 Front Cover Page *
2(a) Expense Summary *
(b) Not Applicable *
3(a) Financial Highlights *
(b) Not Applicable *
(c) Performance Information *
4(a)(b) Other Information *
Concerning the Fund;
Fund Objective; Investment
Policies
(c) Fund Objective; Investment *
Policies
(d) Not Applicable *
5(a) Management *
(b) Management *
(c)(d) Management; Other Information Concerning the Fund *
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<PAGE>
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Item Number
Form N-1A, Statement of Additional
Part A Prospectus Caption Information Caption
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(e) Other Information Concerning *
the Fund; Back Cover Page
(f) Other Information Concerning *
the Fund
(g) Not Applicable *
5A Not Applicable *
6(a) Other Information Concerning *
the Fund
(b) Not Applicable *
(c) Not Applicable *
(d) Not Applicable *
(e)(f) About Your Investment; How to Buy, Sell *
and Exchange Shares (How to Purchase, Redeem
and Exchange Shares); How Distributions Are
Made; Tax Information; Other Information
Concerning the Fund; Make the Most of Your
Vista Privileges.
(f) How Distributions are Made; *
Tax Information
(g) How Distributions are Made; Tax Matters
Tax Information
(h) About Your Investment; How to Buy, *
Sell and Exchange Shares (How to
Purchase, Redeem and Exchange Shares);
Other Information Concerning the Fund
7(a) How to Buy, Sell and Exchange *
Shares (How to Purchase, Redeem
and Exchange Shares)
(b) How the Fund Values its Shares; *
How to Buy, Sell and Exchange
Shares (How to Purchase, Redeem
and Exchange Shares)
(c) Not Applicable *
(d) How to Buy, Sell and Exchange *
Shares (How to Purchase, Redeem and
Exchange Shares)
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<PAGE>
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Item Number
Form N-1A, Statement of Additional
Part A Prospectus Caption Information Caption
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(e) Management; Other Information *
Concerning the Fund
(f) Other Information Concerning the *
Fund
8(a) How to Buy, Sell and Exchange *
Shares (How to Purchase, Redeem
and Exchange Shares)
(b) How to Buy, Sell and Exchange *
Shares (How to Purchase, Redeem
and Exchange Shares)
(c) How to Buy, Sell and Exchange *
Shares (How to Purchase, Redeem
and Exchange Shares)
(d) How to Buy, Sell and Exchange *
Shares (How to Purchase, Redeem
and Exchange Shares)
9 Not Applicable *
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<PAGE>
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Item Number
Form N-1A, Statement of Additional
Part B Prospectus Caption Information Caption
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10 * Front Cover Page
11 * Front Cover Page
12 * Not Applicable
13(a)(b) Fund Objective; Investment Investment Policies
Policies and Restrictions
14(c) * Management of the Trust and
Funds or Portfolios
(b) * Not Applicable
(c) * Management of the Trust and
Funds or Portfolios
15(a) * Not Applicable
(b) * General Information
(c) * General Information
16(a) Management Management of the Trust and
Funds or Portfolios
(b) Management Management of the Trust and
Funds or Portfolios
(c) Other Information Concerning Management of the Trust and
the Fund Funds or Portfolios
(d) Management Management of the Trust and
Funds or Portfolios
(e) * Not Applicable
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<PAGE>
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Item Number
Form N-1A, Statement of Additional
Part B Prospectus Caption Information Caption
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(f) How to Buy, Sell and Exchange Shares Management of the Trust and
(How to Purchase, Redeem and Exchange Shares); Funds or Portfolios
Other Information Concerning the Fund
(g) * Not Applicable
(h) * Management of the Trust and
Funds or Portfolios;
Independent Accountants
(i) * Not Applicable
17 Investment Policies Investment Policies and Restrictions
18(a) Other Information Concerning the Fund; General Information
How to Buy, Sell and Exchange Shares
(How to Purchase, Redeem and Exchange
Shares)
(b) * Not Applicable
19(a) How to Buy, Sell and Exchange Shares Purchases, Redemptions and Exchanges
(How to Purchase, Redeem and Exchange
Shares)
(b) How the Fund Values its Shares; How to Determination of Net Asset Value
Buy, Sell and Exchange Shares (How to
Purchase, Redeem and Exchange Shares)
(c) * Purchases, Redemptions and Exchanges
20 How Distributions are Made; Tax Information Tax Matters
21(a) * Management of the Trust and Funds
or Portfolios
(b) * Management of the Trust and Funds
or Portfolios
(c) * Not Applicable
22 * Performance Information
23 * Not Applicable
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<PAGE>
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of this Registration Statement.
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<PAGE>
PART A
<PAGE>
PROSPECTUS
VISTA[SM] U.S. TREASURY INCOME FUND
Class A and B Shares
May 6, 1996
Investment Strategy: Income
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-34-VISTA. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary .....................................................
The expenses you might pay on your Fund investment, including examples
Financial Highlights ................................................
How the Fund has performed
Fund Objective.......................................................
Investment Policies .................................................
The kinds of securities in which the Fund invests,
investment policies and techniques, and risks
Management ..........................................................
Chase Manhattan Bank, the Fund's adviser; Chase Asset Management,
the Fund's sub-adviser, and the individuals who manage the Fund
About Your Investment ...............................................
Alternative sales arrangements
How to Buy, Sell and Exchange Shares.................................
How the Fund Values its Shares.......................................
How Distributions are Made; Tax Information .........................
How the Fund distributes its earnings, and
tax treatment related to those earnings
Other Information Concerning the Fund ...............................
Distribution plans, shareholder servicing agents, administration,
custodian, expenses, organization and regulatory matters
Performance Information .............................................
How performance is determined, stated and/or advertised
Make the Most of Your Vista Privileges...............................
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<PAGE>
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the Fund based on
expenses incurred in the most recent fiscal year. The examples show the
cumulative expenses attributable to a hypothetical $1,000 investment over
specified periods.
Class A Class B
Shareholder Transaction Expenses Shares Shares
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)................ 4.50% None
Maximum Deferred Sales Charge
(as a percentage of the lower of original
purchase price or redemption proceeds)(*).......... None 5.00%
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee (after estimated waiver) (**) 0.17% 0.17%
12b-1 Fee(***)..................................... 0.25% 0.75%
Shareholder Servicing Fee (after estimated waiver,
where indicated)................................... 0.00%(**) 0.25%
Other Expenses..................................... 0.48% 0.48%
----- -----
Total Fund Operating Expenses (after waivers
of fees) (**) .................................. 0.90% 1.65%
===== =====
Examples
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares(+)................ $54 $72 $93 $151
Class B Shares:
Assuming complete
redemption at the
end of the
period(++)(+++)................ $68 $85 $113 $175
Assuming no
redemptions (+++).............. $17 $52 $90 $175
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* The maximum deferred sales charge on Class B shares applies to redemptions
during the first year after purchase; the charge generally declines by 1%
annually thereafter (except in the fourth year), reaching zero after six
years. See "How to Buy, Sell and Exchange Shares."
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<PAGE>
** Reflects current waiver arrangements to maintain Total Fund Operating
Expenses at the levels indicated in the table above. Absent such waivers,
the Investment Advisory Fee would be 0.30% for Class A and Class B shares,
the Shareholder Servicing Fee would be 0.25% for Class A shares, and Total
Fund Operating Expenses would be 1.28% and 1.78% for Class A and Class B
shares, respectively.
*** Long-term shareholders in mutual funds with 12b-1 fees, such as Class A and
Class B shareholders of the Fund, may pay more than the economic equivalent
of the maximum front-end sales charge permitted by rules of the National
Association of Securities Dealers, Inc.
+ Assumes deduction at the time of purchase of the maximum sales charge.
++ Assumes deduction at the time of redemption of the maximum applicable
deferred sales charge.
+++ Ten-year figures assume conversion of Class B shares to Class A shares at
the beginning of the ninth year after purchase. See "How to Buy, Sell and
Exchange Shares."
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
- 4 -
<PAGE>
FINANCIAL HIGHLIGHTS
The table set forth below provides selected per share data and ratios for
one Class A share and one Class B share for each period shown. This information
is supplemented by financial statements and accompanying notes appearing in the
Fund's Annual Report to Shareholders for the fiscal year ended October 31, 1995
(which are incorporated by reference into the SAI). The financial statements and
notes, as well as the financial information set forth in the table below with
respect to each of the five years in the period ended October 31, 1995, have
been audited by Price Waterhouse LLP, independent accountants, whose report
thereon is also included in the annual report to shareholders. Shareholders can
obtain a copy of this annual report by contacting the Fund or its Shareholder
Servicing Agent.
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VISTA U.S. TREASURY INCOME FUND
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Class A Class B
Year Ended October 31,
----------------------------------------------------------------------------------------------
9/8/87* Year 11/4/93**
through Ended through
PER SHARE OPERATING PERFORMANCE 1995 1994 1993 1992 1991 1990 1989 1988 10/31/87 10/31/95 10/31/94
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Net Asset Value, Beginning of Period $10.60 $12.10 $11.69 $11.53 $10.93 $11.21 $10.90 $10.69 $10.00 $10.59 $11.98
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income 0.699 0.646 0.666 0.786 0.883 0.882 0.885 0.842 0.052 0.621 0.592
Net Gains or (Losses) in Securities
(both realized and unrealized) 0.798 (1.297) 0.699 0.267 0.597 (0.284) 0.319 0.258 0.638 0.797 (1.187)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment Operations 1.497 (0.651) 1.365 1.053 1.480 0.598 1.204 1.100 0.690 1.418 (0.595)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less Distributions
Dividends from Net Investment
Income 0.697 0.646 0.667 0.786 0.882 0.882 0.888 0.890 0.000 0.638 0.592
Distributions from Capital
Gains -- 0.000 0.203 0.287 0.111 0.000 0.000 0.004 0.000 0.000 0.000 0.203
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions 0.697 0.849 0.954 0.897 0.882 0.882 0.892 0.890 0.000 0.638 0.795
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $11.40 $10.60 $12.10 $11.69 $11.53 $10.93 $11.21 $10.90 $10.69 $11.37 $10.59
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return(1) 14.59% (5.58%) 12.35% 9.40% 14.07% 5.70% 11.64% 10.70% 46.64% 13.80% (5.18%)
Ratios/Supplemental Data*:
Net Assets, End of Period
(000 omitted) $99,109 $99,524 $93,039 $59,391 $15,131 $6,359 $3,725 $1,742 $107 $10,652 $5,184
Ratio of Expenses to Average Net
Assets 0.87% 0.76% 0.75% 0.38% 0.02% 0.08% 0.00% 0.00% 0.00%# 1.62% 1.50%#
Ratio of Net Investment Income to
Average Net Assets 6.37% 5.74% 5.61% 6.52% 7.81% 8.08% 8.12% 8.11% 6.29%# 5.53% 5.28%#
Ratio of Expenses without waivers
and assumption of expenses
to Average Net Assets 1.40% 1.28% 1.14% 1.34% 2.89% 2.50% 2.50% 2.00% 2.00%# 1.89% 1.78%#
Ratio of Net Investment Income
without waivers and assumption
of expenses to Average Net Assets 5.84% 5.22% 5.22% 5.56% 4.94% 5.66% 5.62% 6.11% 4.29%# 5.26% 5.00%#
Portfolio Turnover Rate 164% 163% 296% 514% 103% 15% 34% 3% 0% 164% 163%
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(1) Total return figures do not include the effect of any sales load.
* Commencement of operations.
** Commencement of offering of shares.
# Annualized.
- 5 -
<PAGE>
FUND OBJECTIVE
Vista U.S. Treasury Income Fund seeks to provide shareholders with monthly
dividends and to protect the value of their investment. The Fund is not intended
to be a complete investment program, and there is no assurance it will achieve
its objective.
INVESTMENT POLICIES
Investment Approach
The Fund seeks to maximize current income available from debt
obligations of the U.S. Government and certain of its agencies and
instrumentalities, and utilizes futures contracts on fixed income securities or
indices of fixed income securities and options on such futures contracts for the
purpose of hedging the value of its portfolio. All of the Fund's assets will be
invested in obligations that are backed by the "full faith and credit" of the
U.S. Government or in repurchase agreements fully collateralized by U.S.
Government obligations, except that 5% of the Fund's assets may be invested in
futures contracts and options thereon based on U.S. Government obligations,
including any index of government obligations that may be available for trading.
Under normal market conditions, at least 65% of the Fund's assets will be
invested in U.S. Treasury obligations and repurchase agreements thereon.
There is no restriction on the maturity of the Fund's portfolio or any
individual portfolio security. The Fund's advisers may adjust the average
maturity of the Fund's portfolio based upon their assessment of the relative
yields available on securities of different maturities and their expectations of
future changes in interest rates.
The Fund is classified as a "non-diversified" fund under federal
securities law.
The Fund may invest 10% of its total assets in shares of other investment
companies, subject to applicable regulatory limitations.
In lieu of investing directly, the Fund is authorized to seek to achieve
its objective by investing all of its investable assets in an investment company
having substantially the same objective and policies as the Fund.
Other Investment Practices
The Fund may also engage in the following investment practices, when
consistent with the Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI.
Repurchase Agreements, Securities Loans and Forward Commitments. The Fund
may enter into agreements to purchase and resell securities at an agreed-upon
price and time. The Fund also has the ability to lend portfolio securities in an
amount equal to not more than 30% of its total assets to generate additional
income. These transactions must be fully collateralized at all times. The Fund
may purchase securities for delivery at a future date, which may increase its
overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date. These transactions involve
some risk to the Fund if the other party should default on its obligation and
the Fund is delayed or prevented from recovering the collateral or completing
the transaction.
Borrowings and Reverse Repurchase Agreements. The Fund may borrow money
from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Fund may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Fund enters into a reverse repurchase agreement, it
will establish a segregated account in which it will maintain liquid assets on a
daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Fund would be required to pay interest on amounts
obtained through reverse repurchase agreements, which are considered borrowings
under federal securities laws.
Stand-By Commitments. The Fund may enter into put transactions, including
transactions sometimes referred to as stand-by commitments, with respect to
securities in its portfolio. In these transactions, the Fund would acquire the
right to sell a security at an agreed upon price within a specified period prior
to its maturity date. These transactions involve some risk to the Fund if the
other party should default on its obligation and the Fund is delayed or
prevented from recovering the collateral or completing the transaction.
Acquisition of puts will have the effect of increasing the cost of the
securities subject to the put and thereby reducing the yields otherwise
available from such securities.
- 6 -
<PAGE>
Zero Coupon Securities and STRIPS. The Fund may invest in zero coupon
U.S. Government securities. Zero coupon securities are debt securities that do
not pay regular interest payments, and instead are sold at substantial discounts
from their value at maturity. The Fund may also invest in separately traded
principal and interest components of securities backed by the full faith and
credit of the U.S. Government, including instruments known as "STRIPS." The
value of these instruments tends to fluctuate more in response to changes in
interest rates than the value of ordinary interest-paying debt securities with
similar maturities. The risk is greater when the period to maturity is longer.
Floating and Variable Rate Securities. The Fund may invest in floating
rate securities, whose interest rates adjust automatically whenever a specified
interest rate changes, and variable rate securities, whose interest rates are
periodically adjusted. Certain of these instruments permit the holder to demand
payment of principal and accrued interest upon a specified number of days'
notice from either the issuer or a third party. As a result of the variable rate
nature of these investments, the Fund's yield may decline and it may forego the
opportunity for capital appreciation during periods when interest rates decline;
however, during periods when interest rates increase, the Fund's yield may
increase and it may have reduced risk of capital depreciation. Demand features
on certain floating or variable rate securities may obligate the Fund to pay a
"tender fee" to a third party. Demand features provided by foreign banks involve
certain risks associated with foreign investments.
Mortgage-Related Securities. The Fund may invest in mortgage-related U.S.
Government securities. Mortgage pass-through securities are securities
representing interests in "pools" of mortgages in which payments of both
interest and principal on the securities are made monthly, in effect "passing
through" monthly payments made by the individual borrowers on the residential
mortgage loans which underlie the securities. Early repayment of principal on
mortgage pass-through securities held by the Fund (due to prepayments of
principal on the underlying mortgage loans) may result in a lower rate of return
when the Fund reinvests such principal. In addition, if the Fund purchased the
securities at a premium, early repayment would cause the value of the premium to
be lost. Like other fixed-income securities, when interest rates rise the value
of a mortgage-related security generally will decline; however, when interest
rates decline, the value of mortgage-related securities with prepayment features
may not increase as much as other fixed-income securities. Payment of principal
and interest on the mortgage pass-through securities (but not the market value
of the securities themselves) in which the Fund invests will be guaranteed by
the U.S. Government.
The Fund may also invest in investment grade Collateralized Mortgage
Obligations ("CMOs"), which are hybrid instruments with characteristics of both
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal on a CMO are paid, in most cases, monthly. CMOs
may be collateralized by whole mortgage loans but are more typically
collateralized by portfolios of mortgage pass-through securities guaranteed by
the U.S. Government or its agencies or instrumentalities. CMOs are structured
into multiple classes, with each class having a different expected average life
and/or stated maturity. Monthly payments of principal, including prepayments,
are allocated to different classes in accordance with the terms of the
instruments, and changes in prepayment rates or assumptions may significantly
affect the expected average life and value of a particular class.
Derivatives and Related Instruments. The Fund may invest its assets in
derivative and related instruments to hedge various market risks. Some of these
instruments will be subject to asset segregation requirements to cover the
Fund's obligations. The Fund may (i) purchase, write and exercise call and put
options on securities and related securities indexes (including using options in
combination with securities, other options or derivative instruments); (ii)
enter into futures contracts and options on futures contracts and (iii) employ
forward interest rate contracts.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Fund invests may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of the Fund to successfully utilize
these instruments may depend in part upon the ability of the Fund's advisers to
forecast these factors correctly. Inaccurate forecasts could expose the Fund to
a risk of loss. There can be no guarantee that there will be a correlation
between price movements in a hedging instrument and in the portfolio assets
being hedged. The Fund is not required to use any hedging strategies. Hedging
strategies, while reducing risk of loss, can also reduce the opportunity for
gain. There can be no assurance that a liquid market will
- 7 -
<PAGE>
exist at a time when the Fund seeks to close out a derivatives position.
Activities of large traders in the futures and securities markets involving
arbitrage, "program trading," and other investment strategies may cause price
distortions in derivatives markets. In certain instances, particularly those
involving over-the-counter transactions or forward contracts, there is a greater
potential that a counterparty or broker may default. In the event of a default,
the Fund may experience a loss. For additional information concerning
derivatives, related instruments and the associated risks, see the SAI.
Portfolio Turnover. The frequency of the Fund's portfolio transactions
will vary from year to year. The Fund's investment policies may lead to
frequent changes in investments, particularly in periods of rapidly changing
market conditions. High portfolio turnover rates would generally result in
higher transaction costs, including brokerage commissions or dealer mark-ups,
and would make it more difficult for the Fund to qualify as a registered
investment company under federal tax law. See "How Distributions are Made; Tax
Information" and "Other Information Concerning the Fund--Certain Regulatory
Matters."
Limiting Investment Risks
Specific investment restrictions help the Fund limit investment risks for
its shareholders. Among these restrictions, the Fund is prohibited from
investing more than 15% of its net assets in illiquid securities (which include
securities restricted as to resale unless they are determined to be readily
marketable in accordance with procedures established by the Board of Trustees).
A complete description of this and other investment policies is included in the
SAI. Except for the Fund's investment objective and investment policies
designated as fundamental in the SAI, the Fund's investment policies are not
fundamental. The Trustees may change any non-fundamental investment policy
without shareholder approval.
Risk Factors
The Fund does not constitute a balanced or complete investment program,
and the net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities in the Fund's portfolio.
The performance of the Fund depends in part on interest rate changes. As
interest rates increase, the value of the fixed income securities held by the
Fund tends to decrease. This effect will be more pronounced with respect to
investments by the Fund in mortgage-related securities, the value of which are
more sensitive to interest rate changes. There is no restriction on the maturity
of the Fund's portfolio or any individual portfolio security, and to the extent
the Fund invests in securities with longer maturities, the volatility of the
Fund in response to changes in interest rates can be expected to be greater than
if the Fund had invested in comparable securities with shorter maturities.
Guarantees of principal and interest on obligations that may be purchased by the
Fund are not guarantees of the market value of such obligations, nor do they
extend to the value of shares of the Fund.
For a discussion of certain other risks associated with the Fund's
additional investment activities, see "Other Investment Practices" above.
MANAGEMENT
The Fund's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the Fund
pursuant to an Investment Advisory Agreement and has overall responsibility for
investment decisions of the Fund, subject to the oversight of the Board of
Trustees. Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation,
a bank holding company. Chase and its predecessors have over 100 years of money
management experience. For its investment advisory services to the Fund, Chase
is entitled to receive an annual fee computed daily and paid monthly based at an
annual rate equal to 0.30% of the Fund's average daily net assets. Chase is
located at 270 Park Avenue, New York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Fund pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly-owned operating subsidiary of
Chase. CAM makes investment decisions for the Fund on a day-to-day basis. For
these services, CAM is entitled to receive a fee, payable by Chase from its
advisory fee, at an annual rate equal to 0.15% of the Fund's average daily net
assets. CAM was recently formed for the purpose of providing discretionary
investment advisory services to institutional clients and to consolidate Chase's
investment management function. The same individuals who serve as portfolio
managers for
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Chase also serve as portfolio managers for CAM. CAM is located at 1211 Avenue of
the Americas, New York, New York 10036.
Portfolio Manager. Alex Powers, Vice President of Chase has been
responsible for the day-to-day management of the Vista U.S. Treasury Income Fund
and fixed-income trading for the Vista Balanced Fund since November 1994. He
also manages various individual and institutional accounts. Mr. Powers is part
of a team responsible for fixed-income strategy, research and trading within
Chase. Prior to joining Chase in 1988, he spent six years as Vice President and
Portfolio Manager at Liberty Capital, an institutional fixed-income advisory
firm.
ABOUT YOUR INVESTMENT
Alternative Sales Arrangements
Class A shares. An investor who purchases Class A shares pays a sales
charge at the time of purchase. As a result, Class A shares are not subject to
any sales charges when they are redeemed. Certain purchases of Class A shares
qualify for reduced sales charges. Class A shares have lower combined 12b-1 and
service fees than Class B shares. See "How to Buy, Sell and Exchange Shares" and
"Other Information Concerning the Fund."
Class B shares. Class B shares are sold without an initial sales charge,
but are subject to a contingent deferred sales charge ("CDSC") if redeemed
within a specified period after purchase. Class B shares also have a higher
combined 12b-1 and service fees than Class A shares.
Class B shares automatically convert into Class A shares, based on
relative net asset value, at the beginning of the ninth year after purchase. For
more information about the conversion of Class B shares, see the SAI. This
discussion will include information about how shares acquired through
reinvestment of distributions are treated for conversion purposes. Class B
shares provide an investor the benefit of putting all of the investor's dollars
to work from the time the investment is made. Until conversion, Class B shares
will have a higher expense ratio and pay lower dividends than Class A shares
because of the higher combined 12b-1 and service fees. See "How to Buy, Sell and
Exchange Shares" and "Other Information Concerning the Fund."
Which arrangement is best for you? The decision as to which class of
shares provides a more suitable investment for an investor depends on a number
of factors, including the amount and intended length of the investment.
Investors making investments that qualify for reduced sales charges might
consider Class A shares. Investors who prefer not to pay an initial sales charge
might consider Class B shares. In almost all cases, investors planning to
purchase $250,000 or more of the Fund's shares will pay lower aggregate charges
and expenses by purchasing Class A shares.
HOW TO BUY, SELL AND EXCHANGE SHARES
How to Buy Shares
You can open a Fund account with as little as $2,500 ($1,000 for IRAs,
SEP-IRAs and the Systematic Investment Plan) and make additional investments at
any time with as little as $100. You can buy Fund shares three ways--through an
investment representative, through the Fund's distributor by calling the Vista
Service Center, or through the Systematic Investment Plan.
All purchases made by check should be in U.S. dollars and made payable to
the Vista Funds. Third party checks, credit cards and cash will not be accepted.
The Fund reserves the right to reject any purchase order or cease offering
shares for purchase at any time. When purchases are made by check, redemptions
will not be allowed until clearance of the purchase check, which may take 15
calendar days or longer. In addition, the redemption of shares purchased through
ACH will not be allowed until clearance of your payment which may take 7
business days or longer.
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Buying shares through the Fund's distributor. Complete and return the
enclosed application and your check in the amount you wish to invest to the
Vista Service Center.
Buying shares through systematic investing. You can make regular
investments of $100 or more per transaction through automatic periodic deduction
from your bank checking or savings account. Shareholders electing to start this
Systematic Investment Plan when opening an account should complete Section 8 of
the account application. Current shareholders may begin such a plan at any time
by sending a signed letter with signature guarantee and a deposit slip or voided
check to the Vista Service Center. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Shares are sold at the public offering price based on the net asset value
next determined after the Vista Service Center receives your order in proper
form. In most cases, in order to receive that day's public offering price, the
Vista Service Center must receive your order before the close of regular trading
on the New York Stock Exchange. If you buy shares through your investment
representative, the representative must receive your order before the close of
regular trading on the New York Stock Exchange to receive that day's public
offering price. Orders for shares are accepted by the Fund after funds are
converted to federal funds. Orders paid by check and received by 2:00 p.m.,
Eastern Time will generally be available for the purchase of shares the
following business day.
If you are considering redeeming or exchanging shares or transferring
shares to another person shortly after purchase, you should pay for those shares
with a certified check to avoid any delay in redemption, exchange or transfer.
Otherwise the Fund may delay payment until the purchase price of those shares
has been collected or, if you redeem by telephone, until 15 calendar days after
the purchase date. To eliminate the need for safekeeping, the Fund will not
issue certificates for your Class A shares unless you request them. Due to the
conversion feature of Class B shares, certificates for Class B shares will not
be issued and all Class B shares will be held in book entry form.
Class A Shares
The public offering price of Class A shares is the net asset value plus a
sales charge that varies depending on the size of your purchase. The Fund
receives the net asset value. The sales charge is allocated between your
broker-dealer and the Fund's distributor as shown in the following table, except
when the Fund's distributor, in its discretion, allocates the entire amount to
your broker-dealer.
- -------------------------------------------------------------------------------
Sales charge as a
percentage of: Amount of sales charge
Amount of transaction at Offering Net amount reallowed to dealers as a
offering price($) price invested percentage of offering price
- -------------------------------------------------------------------------------
Under 100,000 4.50 4.71 4.00
- -------------------------------------------------------------------------------
100,000 but under 250,000 3.75 3.90 3.25
- -------------------------------------------------------------------------------
250,000 but under 500,000 2.50 2.56 2.25
- -------------------------------------------------------------------------------
500,000 but under 1,000,000 2.00 2.04 1.75
- -------------------------------------------------------------------------------
There is no initial sales charge on purchases of Class A shares of $1
million or more.
The Fund's distributor pays broker-dealers commissions on net sales of
Class A shares of $1 million or more based on an investor's cumulative
purchases. Such commissions are paid at the rate of 0.75% of the amount under
$2.5 million, 0.50% of the next $7.5 million, 0.25% of the next $40 million and
0.15% thereafter. The Fund's distributor may withold such payments with respect
to short-term investments.
Class B Shares
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<PAGE>
Class B shares are sold without an initial sales charge, although a CDSC
will be imposed if you redeem shares within a specified period after purchase,
as shown in the table below. The following types of shares may be redeemed
without charge at any time: (i) shares acquired by reinvestment of distributions
and (ii) shares otherwise exempt from the CDSC, as described below. For other
shares, the amount of the charge is determined as a percentage of the lesser of
the current market value or the purchase price of shares being redeemed.
Year 1 2 3 4 5 6 7 8+
- --------------------------------------------------------------
CDSC 5% 4% 3% 3% 2% 1% 0% 0%
In determining whether a CDSC is payable on any redemption, the Fund will
first redeem shares not subject to any charge, and then shares held longest
during the CDSC period. When a share that has appreciated in value is redeemed
during the CDSC period, a CDSC is assessed only on its initial purchase price.
For information on how sales charges are calculated if you exchange your shares,
see "How to Exchange Your Shares." The Fund's distributor pays broker-dealers a
commission of 4.00% of the offering price on sales of Class B shares, and the
distributor receives the entire amount of any CDSC you pay.
General
You may be eligible to buy Class A shares at reduced sales charges.
Consult your investment representative or the Vista Service Center for details
about Vista's combined purchase privilege, cumulative quantity discount,
statement of intention, group sales plan, employee benefit plans, and other
plans. Descriptions are also included in the enclosed application and in the
SAI. In addition, sales charges will not apply to shares purchased with
redemption proceeds received within the prior ninety days from non-Vista mutual
funds on which the investor paid a front-end or contingent deferred sales
charge.
A participant-directed employee benefit plan participating in a
"multi-fund" program approved by the Board of Trustees may include amounts
invested in the other mutual funds participating in such program for purposes of
determining whether the plan may purchase Class A shares at net asset value.
These investments will also be included for purposes of the discount privileges
and programs described above.
The Fund may sell Class A shares at net asset value without an initial
sales charge to the current and retired Trustees (and their immediate families),
current and retired employees (and their immediate families) of Chase, the
Fund's distributor and transfer agent or any affiliates or subsidiaries thereof,
registered representatives and other employees (and their immediate families) of
broker-dealers having selected dealer agreements with the Fund's distributor,
employees (and their immediate families) of financial institutions having
selected dealer agreements with the Fund's distributor (or otherwise having an
arrangement with a broker-dealer or financial institution with respect to sales
of Vista fund shares) financial institution trust departments investing an
aggregate of $1 million or more in the Vista Family of Funds and clients of
certain administrators of tax-qualified plans when proceeds from repayments of
loans to participants are invested (or reinvested) in the Vista Family of Funds.
No initial sales charge will apply to the purchase of Class A shares of
the Fund by an investor seeking to invest the proceeds of a qualified retirement
plan where a portion of the plan was invested in the Vista Family of Funds, any
qualified retirement plan with 50 or more participants, or an individual
participant in a tax-qualified plan making a tax-free rollover or transfer of
assets from the plan in which Chase or an affiliate serves as trustee or
custodian of the plan or manages some portion of the plan's assets.
Purchases of Class A shares of the Fund may be made with no initial sales
charge through an investment adviser or financial planner that charges a fee for
its services. Purchases of Class A shares of the Fund may be made with no
initial sales charge (i) by an investment adviser, broker or financial planner,
provided arrangements are preapproved and purchases are placed through an
omnibus account with the Fund or (ii) by clients of such investment adviser or
financial planner who place trades for their own accounts, if such accounts are
linked to a master account of such investment adviser or financial planner on
the books and records of the broker or agent. Such purchases may be made for
retirement and deferred compensation plans and trusts used to fund those plans.
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<PAGE>
Purchases of Class A shares of the Fund may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary exercising investment discretion, provided that
appropriate notification of such fiduciary relationship is reported at the time
of the investment to the Fund, the Fund's distributor or the Vista Service
Center.
Shareholders of record of any Vista fund as of November 30, 1990 and
certain immediate family members may purchase Class A shares of the Fund with no
initial sales charge for as long as they continue to own Class A shares of any
Vista fund, provided there is no change in account registration. Shareholders of
record of any portfolio of The Hanover Funds, Inc. or The Hanover Investment
Funds, Inc. as of May 3, 1996 and certain related investors may purchase Class A
shares of the Fund with no initial sales charge for as long as they continue to
own shares of any Vista fund following this date, provided there is no change in
account registration.
The Fund may sell Class A shares at net asset value without an initial
sales charge in connection with the acquisition by the Fund of assets of an
investment company or personal holding company. The CDSC will be waived on
redemption of Class B shares arising out of death or disability or in connection
with certain withdrawals from IRA or other retirement plans. Up to 12% of the
value of Class B shares subject to a systematic withdrawal plan may also be
redeemed each year without a CDSC, provided that the Class B account had a
minimum balance of $20,000 at the time the systematic withdrawal plan was
established. The SAI contains additional information about purchasing the Fund's
shares at reduced sales charges.
The Fund reserves the right to change any of these policies on purchases
without an initial sales charge at any time and may reject any such purchase
request.
Shareholders of other Vista funds may be entitled to exchange their shares
for, or reinvest distributions from their funds in, shares of the Fund at net
asset value.
How to Sell Shares
You can sell your shares to the Fund any day the New York Stock Exchange
is open, either directly to the Fund or through your investment representative.
The Fund will only forward redemption payments on shares for which it has
collected payment of the purchase price.
Selling shares directly to the Fund. Send a signed letter of instruction
to the Vista Service Center, along with any certificates that represent shares
you want to sell. The price you will receive is the next net asset value
calculated after the Fund receives your request in proper form, less any
applicable CDSC. In order to receive that day's net asset value, the Vista
Service Center must receive your request before the close of regular trading on
the New York Stock Exchange.
If you sell shares having a net asset value of $100,000 or more, the
signatures of registered owners or their legal representatives must be
guaranteed by a bank, broker-dealer or certain other financial institutions. See
the SAI for more information about where to obtain a signature guarantee.
If you want your redemption proceeds sent to an address other than your
address as it appears on Vista's records, a signature guarantee is required. The
Fund may require additional documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Vista Service Center for details.
The Fund generally sends you payment for your shares the business day
after your request is received, assuming the Fund has collected payment of the
purchase price of your shares. Under unusual circumstances, the Fund may suspend
redemptions, or postpone payment for more than seven days, as permitted by
federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and
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<PAGE>
transfer instructions received by telephone from a shareholder, or any person
claiming to act as his or her representative, who can provide the Fund with his
or her account registration and address as it appears on the Fund's records.
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request, as described above,
or contact your investment representative. The Telephone Redemption Privilege is
not available if you were issued certificates for shares that remain
outstanding. The Telephone Redemption Privilege may be modified or terminated
without notice.
Systematic withdrawal. You can make regular withdrawals of $50 or more
($100 or more for Class B accounts) monthly, quarterly or semiannually. A
minimum account balance of $5,000 is required to establish a systematic
withdrawal plan for Class A accounts. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Selling shares through your investment representative. Your investment
representative must receive your request before the close of regular trading on
the New York Stock Exchange to receive that day's net asset value. Your
investment representative will be responsible for furnishing all necessary
documentation to the Vista Service Center, and may charge you for its services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem
your shares if at such time the aggregate net asset value of the shares in your
account is less than $500 or if you purchase through the Systematic Investment
Plan and fail to meet the Fund's investment minimum within a twelve month
period. In the event of any such redemption, you will receive at least 60 days
notice prior to the redemption. In the event the Fund redeems Class B shares
pursuant to this provision, no CDSC will be imposed.
How to Exchange Your Shares
You can exchange your shares for shares of the same class of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer all classes of shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully and retained for
future reference. If you exchange shares subject to a CDSC, the transaction will
not be subject to the CDSC. However, when you redeem the shares acquired through
the exchange, the redemption may be subject to the CDSC, depending upon when you
originally purchased the shares. The CDSC will be computed using the schedule of
any fund into or from which you have exchanged your shares that would result in
your paying the highest CDSC applicable to your class of shares. In computing
the CDSC, the length of time you have owned your shares will be measured from
the date of original purchase and will not be affected by any exchange.
An exchange of Class B shares into any of the Vista money market funds
other than the Class B shares of the Vista Prime Money Market Fund will be
treated as a redemption -- and therefore subject to the conditions of the CDSC
- -- and a subsequent purchase. Class B shares of any Vista non-money market fund
may be exchanged into the Class B shares of the Vista Prime Money Market Fund in
order to continue the aging of the initial purchase of such shares.
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
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<PAGE>
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the amount or
number of exchanges or reject any exchange. In addition, any shareholder who
makes more than ten exchanges of shares involving the Fund in a year or three in
a calendar quarter will be charged a $5.00 administration fee for each such
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult the Vista Service Center before requesting an exchange.
See the SAI to find out more about the exchange privilege.
Reinstatement privilege. Class A shareholders have a one time privilege of
reinstating their investment in the Fund at net asset value next determined
subject to written request within 90 calendar days of the redemption,
accompanied by payment for the shares (not in excess of the redemption). Class B
shareholders who have redeemed their shares and paid a CDSC with such redemption
may purchase Class A shares with no initial sales charge (in an amount not in
excess of their redemption proceeds) if the purchase occurs within 90 days of
the redemption of the Class B shares.
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each business day of the Fund, by
dividing the net assets of the Fund attributable to that class by the total
number of outstanding shares of that class. Values of assets held by the Fund
are determined on the basis of their market or other fair value, as described in
the SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund declares dividends daily and distributes any net investment
income at least monthly. The Fund distributes any net realized capital gains at
least annually. Distributions from capital gains are made after applying any
available capital loss carryover. Distributions paid by the Fund with respect
to Class A shares will generally be greater than those paid with respect to
Class B shares because expenses attributable to Class B shares will generally be
higher.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares without a sales charge; (2) receive
distributions from net investment income in cash or by ACH to a pre-established
bank account while reinvesting capital gains distributions in additional shares
without a sales charge; or (3) receive all distributions in cash or by ACH. You
can change your distribution option by notifying the Vista Service Center in
writing. If you do not select an option when you open your account, all
distributions will be reinvested. All distributions not paid in cash or by ACH
will be reinvested in shares of the class on which the distributions are paid.
You will receive a statement confirming reinvestment of distributions in
additional Fund shares promptly following the quarter in which the reinvestment
occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
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All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
Distributions may also be subject to state and local taxes. However, the
laws of most states and localities exempt some types of taxes distributions such
as those made by the Fund to the extent such distributions are attributable to
interest from obligations of the U.S. Government and certain of its agencies and
instrumentalities.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Distribution Plans
The Fund's distributor is Vista Fund Distributors, Inc. ("VFD").
VFD is a subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase.
The Trust has adopted Rule 12b-1 distribution plans for Class A and Class B
shares which provide that the Fund will pay distribution fees at annual rates of
up to 0.25% and 0.75% annually of the average daily net assets attributable to
Class A and Class B shares of the Fund, respectively. Payments under the
distribution plans shall be used to compensate or reimburse the Fund's
distributor and broker-dealers for services provided and expenses incurred in
connection with the sale of Class A and Class B shares, and are not tied to the
amount of actual expenses incurred. Payments may be used to compensate
broker-dealers with trail or maintenance commissions at an annual rate of up to
0.25% of the average daily net asset value of Class A or Class B shares
maintained in the Fund by customers of these broker-dealers. Trail or
maintenance commissions are paid to broker-dealers beginning the 13th month
following the purchase of shares by their customers. Some activities intended to
promote the sale of Class A and Class B shares will be conducted generally by
the Vista Family of Funds, and activities intended to promote the Fund's Class A
or Class B shares may also benefit the Fund's other shares and other Vista
funds.
VFD may provide promotional incentives to broker-dealers that meet
specified sales targets for one or more Vista funds. These incentives may
include gifts of up to $100 per person annually; an occasional meal, ticket to a
sporting event or theater or entertainment for broker-dealers and their guests;
and payment or reimbursement for travel expenses, including lodging and meals,
in connection with attendance at training and educational meetings within and
outside the U.S.
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Class A or Class B shares of the Fund. These
services include assisting with purchase and redemption transactions,
maintaining shareholder accounts and records, furnishing customer statements,
transmitting shareholder reports and communications to customers and other
similar shareholder liaison services. For performing these services, each
shareholder servicing agent receives an annual fee of up to 0.25% of the average
daily net assets of Class A and Class B shares of the Fund held by investors for
whom the
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shareholder servicing agent maintains a servicing relationship. Shareholder
servicing agents may subcontract with other parties for the provision of
shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing
orders to purchase, redeem and exchange Fund shares and responding to certain
customer inquiries. The amount of such compensation may be up to 0.10% annually
of the average net assets of the Fund attributable to shares of the Fund held
by customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator and Sub-Administrator
Chase acts as administrator of the Fund and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets.
VFD provides certain sub-administrative services to the Fund pursuant to
a distribution and sub-administration agreement and is entitled to receive a
fee for these services from the Fund at an annual rate equal to 0.05% of the
Fund's average daily net assets. VFD has agreed to use a portion of this fee to
pay for certain expenses incurred in connection with organizing new series of
the Trust and certain other ongoing expenses of the Trust. VFD is located at 101
Park Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Shareholder servicing and
distribution fees are allocated to specific classes of the Fund. In addition,
the Fund may allocate transfer agency and certain other expenses by class.
Service providers to the Fund may, from time to time, voluntarily waive all or a
portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). Prior to May 6, 1996, the Fund was known as the Vista U.S. Government
Income Fund. The Trust has reserved the right to create and issue additional
series and classes. Each share of a series or class represents an equal
proportionate interest in that series or class with each other share of that
series or class. The shares of each series or class participate equally in the
earnings, dividends and assets of the particular series or class. Shares have no
preemptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of the Fund generally
- 16 -
<PAGE>
vote together except when required under federal securities laws to vote
separately on matters that only affect a particular class, such as the approval
of distribution plans for a particular class.
The Fund issues multiple classes of shares. This Prospectus relates to
Class A and Class B shares of the Fund. The Fund may offer other classes of
shares in addition to these classes. The categories of investors that are
eligible to purchase shares and minimum investment requirements may differ for
each class of Fund shares. In addition, other classes of Fund shares may be
subject to differences in sales charge arrangements, ongoing distribution and
service fee levels, and levels of certain other expenses, which would affect the
relative performance of the different classes. Investors may call 1-800-34-VISTA
to obtain additional information about other classes of shares of the Fund that
are offered. Any person entitled to receive compensation for selling or
servicing shares of the Fund may receive different levels of compensation with
respect to one class of shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
- 17 -
<PAGE>
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income calculated pursuant to federal rules per share
during a recent 30-day period by the maximum public offering price per share of
such class on the last day of that period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the maximum public offering price (in the case of Class A shares) or
reflecting the deduction of any applicable contingent deferred sales charge (in
the case of Class B shares). Total return may also be presented for other
periods or without reflecting sales charges. Any quotation of investment
performance not reflecting the maximum initial sales charge or contingent
deferred sales charge would be reduced if such sales charges were used.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other mutual
funds and other investment vehicles. Quotation of investment performance for any
period when a fee waiver or expense limitation was in effect will be greater
than if the waiver or limitation had not been in effect. The Fund's performance
may be compared to other mutual funds, relevant indices and rankings prepared by
independent services. See the SAI.
- 18 -
<PAGE>
MAKE THE MOST OF YOUR VISTA PRIVILEGES
The following services are available to you as a Vista mutual fund shareholder.
o SYSTEMATIC INVESTMENT PLAN -- Invest as much as you wish ($100 or more) in
the first or third week of any month. The amount will be automatically
transferred from your checking or savings account.
o SYSTEMATIC WITHDRAWAL -- Make regular withdrawals of $50 or more ($100 or
more for Class B accounts) monthly, quarterly or semiannually. A minimum
account balance of $5,000 is required to establish a systematic withdrawal
plan for Class A accounts.
o SYSTEMATIC EXCHANGE -- Transfer assets automatically from one Vista
account to another on a regular, prearranged basis. There is no additional
charge for this service.
o FREE EXCHANGE PRIVILEGE -- Exchange money between Vista funds in the same
class of shares without charge. The exchange privilege allows you to
adjust your investments as your objectives change.
Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange and systematic withdrawal or exchange.
o REINSTATEMENT PRIVILEGE -- Class A shareholders have a one time privilege
of reinstating their investment in the Fund at net asset value next
determined subject to written request within 90 calendar days of the
redemption, accompanied by payment for the shares (not in excess of the
redemption).
Class B shareholders who have redeemed their shares and paid a CDSC with
such redemption may purchase Class A shares with no initial sales charge
(in an amount not in excess of their redemption proceeds) if the purchase
occurs within 90 days of the redemption of the Class B shares.
For more information about any of these services and privileges, call your
shareholder servicing agent, investment representative or the Vista Service
Center at 1-800-34-VISTA. These privileges are subject to change or termination.
- 19 -
<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
- 20 -
<PAGE>
PROSPECTUS
VISTA[SM] BALANCED FUND
Class A and B Shares
May 6, 1996
Investment Strategy: Total Return
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-34-VISTA. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary ....................................................
The expenses you might pay on your Fund investment, including examples
Financial Highlights................................................
How the Fund has performed
Fund Objective......................................................
Investment Policies ................................................
The kinds of securities in which the Fund invests,
investment policies and techniques, and risks
Management .........................................................
Chase Manhattan Bank, the Fund's adviser; Chase Asset Management,
the Fund's sub-adviser, and the individuals who manage the Fund
About Your Investment...............................................
Alternative sales arrangements
How to Buy, Sell and Exchange Shares................................
How the Fund Values its Shares......................................
How Distributions are Made; Tax Information ........................
How the Fund distributes its earnings, and
tax treatment related to those earnings
Other Information Concerning the Fund ..............................
Distribution plans, shareholder servicing agents, administration,
custodian, expenses, organization and regulatory matters
Performance Information ............................................
How performance is determined, stated and/or advertised
Make the Most of Your Vista Privileges..............................
-2-
<PAGE>
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the Fund based on
expenses incurred in the most recent fiscal year. The examples show the
cumulative expenses attributable to a hypothetical $1,000 investment over
specified periods.
<TABLE>
<CAPTION>
Class A Class B
Shareholder Transaction Expenses Shares Shares
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) .............................. 4.50% None
Maximum Deferred Sales Charge
(as a percentage of the lower of original
purchase price or redemption proceeds)(*) ........................ None 5.00%
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee (after estimated waiver) (**) ............ 0.15% 0.15%
12b-1 Fee(***) ................................................... 0.25% 0.75%
Shareholder Servicing Fee (after estimated waiver, where indicated) 0.00%(**) 0.25%
Other Expenses ................................................... 0.85% 0.85%
---- ----
Total Fund Operating Expenses (after waivers of fees)(**) ......... 1.25% 2.00%
==== ====
</TABLE>
Examples
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares(+) . ............. $57 $83 $111 $189
Class B Shares:
Assuming complete
redemption at the
end of the
period(++)(+++) . ............. $72 $96 $131 $213
Assuming no
redemptions (+++) ............. $20 $63 $108 $213
</TABLE>
- -----------------------
-3-
<PAGE>
* The maximum deferred sales charge on Class B shares applies to redemptions
during the first year after purchase; the charge generally declines by 1%
annually thereafter (except in the fourth year), reaching zero after six
years. See "Other Information Concerning the Fund."
** Reflects current waiver arrangements to maintain Total Fund Operating
Expenses at the levels indicated in the table above. Absent such waivers,
the Investment Advisory Fee would be 0.50% for Class A and Class B shares,
the Shareholder Servicing Fee would be 0.25% for Class A shares, and Total
Fund Operating Expenses would be 1.85% and 2.35% for Class A and Class B
shares, respectively.
*** Long-term shareholders in mutual funds with 12b-1 fees, such as Class A and
Class B shareholders of the Fund, may pay more than the economic equivalent
of the maximum front-end sales charge permitted by rules of the National
Association of Securities Dealers, Inc.
+ Assumes deduction at the time of purchase of the maximum sales charge.
++ Assumes deduction at the time of redemption of the maximum applicable
deferred sales charge.
+++ Ten-year figures assume conversion of Class B shares to Class A shares at
the beginning of the ninth year after purchase. See "How to Buy, Sell and
Exchange Shares."
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
-4-
<PAGE>
FINANCIAL HIGHLIGHTS
The table set forth below provides selected per share data and ratios for
both Class A and Class B shares outstanding for each period shown. This
information is supplemented by and should be read in conjunction with financial
statements and accompanying notes appearing in the Fund's Annual Report to
Shareholders for the fiscal year ended October 31, 1995, which is incorporated
by reference into the SAI. Shareholders can obtain a copy of this annual report
by contacting the Fund or their Shareholder Servicing Agent. The financial
statements and notes, as well as the financial information set forth in the
table below have been audited by Price Waterhouse LLP, independent accountants,
whose report thereon is also included in the Annual Report to Shareholders.
<TABLE>
<CAPTION>
VISTA BALANCED FUND
-------------------------------------------------------------------
Class A Class B
------------------------------------- ------------------------
Year Year
Ended 11/4/92* Ended 11/4/93**
----------------------- through -------- through
10/31/95 10/31/94 10/31/93 10/31/95 10/31/94
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period .............. $11.09 $11.38 $10.00 $11.03 $11.22
------ ------ ------ ------ ------
Income from Investment Operations:
Net Investment Income ..................... 0.382 0.356 0.410 0.309 0.345
Net Gains or (Losses) in Securities
(both realized and unrealized) ....... 1.517 (0.187) 1.344 1.502 (0.117)
----- ------ ----- ----- ------
Total from Investment Operations. 1.899 0.169 1.754 1.811 0.228
----- ------ ----- ----- -----
Less Distributions:
Dividends from Net Investment
Income ................................ 0.408 0.359 0.375 0.131 0.318
Distributions from Capital Gains. 0.131 0.100 0.000 0.350 0.100
----- ----- ----- ----- -----
Total Distributions ....................... 0.539 0.459 0.375 0.481 0.418
----- ----- ----- ----- -----
Net Asset Value, End of Period .................... $12.45 $11.09 $11.38 $12.36 $11.03
------ ------ ------ ------ ------
Total Return(1) ................................... 17.70% 1.56% 17.74% 16.93% 2.17%
Ratios/Supplemental Data:
Net Assets, End of Period
(000 omitted) ............................... $33,733 $21,705 $13,920 $6,336 $3,543
Ratio of Expenses to Average Net
Assets# ..................................... 1.06% 0.58% 0.00% 1.82% 1.50%
Ratio of Net Investment Income to Average Net
Assets# ..................................... 3.48% 3.21% 3.87% 2.68% 2.46%
Ratio of Expenses without waivers and
assumption of expenses to Average Net Assets# 2.20% 2.20% 3.07% 2.72% 2.69%
Ratio of Net Investment Income without
waivers and assumption of expenses to Average
Net Assets# 2.34% 1.59% 0.80% 1.78% 1.24%
Porttfolio Turnover Rate .......................... 68% 77% 65% 68% 77%
</TABLE>
- ------------------------
# Short periods have been annualized.
* Commencement of operations.
** Commencement of offering of shares.
(1) Total return figures do not include the effect of any sales load on Class A
shares or any contingent deferred sale charges on Class B shares.
-5-
<PAGE>
FUND OBJECTIVE
Vista Balanced Fund seeks to maximize total return through long-term
capital growth and current income. There is no assurance that the Fund will
achieve its objective.
INVESTMENT POLICIES
Investment Approach
The Fund will invest in equity and debt securities. Under normal market
conditions, 35% to 70% of the Fund's total assets will be invested in equity
securities. The majority of the Fund's equity investments will be in well-known,
established companies with market capitalizations of at least $200 million which
are traded on established securities markets or over-the-counter. The equity
securities in which the Fund may invest include common stocks, preferred stocks,
securities convertible into common and preferred stocks and warrants to purchase
common stocks.
Under normal market conditions, at least 25% of the Fund's total assets
will be invested in investment grade fixed-income securities. The fixed income
securities in which the Fund may invest include non-convertible corporate debt
securities and U.S. Government obligations. Corporate debt securities in which
the Fund invests will be rated at the time of purchase in the category Baa or
higher by Moody's Investor Service, Inc. ("Moody's"), or BBB or higher by
Standard & Poor's Corporation ("S&P") or the equivalent by another national
rating organization, or, if unrated, determined by the Fund's advisers to be of
comparable quality.
The Fund's advisers may alter the relative portion of the Fund's assets
invested in equity and fixed income securities depending on their judgment as to
general market and economic conditions and trends, yields and interest rates and
changes in monetary policies. The average maturity of the Fund's fixed income
investments will vary based upon the advisers' assessment of the relative yields
available on securities of different maturities.
The Fund may invest any portion of its assets not invested as described
above in high quality money market instruments and repurchase agreements. For
temporary defensive purposes, the Fund may invest without limitation in these
instruments. To the extent that the Fund departs from its investment policies
during temporary defensive periods, its investment objective may not be
achieved.
The Fund is classified as a "diversified" fund under federal securities
law.
In lieu of investing directly, the Fund is authorized to seek to achieve
its objective by investing all of its investable assets in an investment company
having substantially the same investment objective and policies as the Fund.
Other Investment Practices
The Fund may also engage in the following investment practices, when
consistent with the Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI.
Foreign Securities. The Fund may invest up to 20% of its total assets in
foreign securities, including Depositary Receipts. Since foreign securities are
normally denominated and traded in foreign currencies, the values of the Fund's
foreign investments may be affected favorably or unfavorably by currency
exchange rates and exchange control regulations. There may be less information
publicly available about foreign companies than U.S. companies, and they are not
generally subject to accounting, auditing and financial reporting standards and
practices comparable to those in the U.S. The securities of foreign companies
may be less liquid and more volatile than the securities of comparable U.S.
companies. Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in payment or delivery of securities or in the
recovery of the Fund's assets held abroad) and expenses. It is possible that
nationalization or expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial instability and
diplomatic developments could affect the value of the Fund's investments in
certain foreign countries. Foreign laws may restrict the ability to invest in
certain countries
-6-
<PAGE>
or issuers and special tax considerations will apply to foreign securities. The
risks can increase if the Fund invests in securities of issuers in emerging
markets.
The Fund may invest its assets in securities of foreign issuers in the
form of American Depositary Receipts, European Depositary Receipts, Global
Depositary Receipts or other similar securities representing securities of
foreign issuers (collectively, "Depositary Receipts"). The Fund treats
Depositary Receipts as interests in the underlying securities for purposes of
its investment policies. The Fund will limit its investment in Depositary
Receipts not sponsored by the issuer of the underlying securities to no more
than 5% of the value of its net assets (at the time of investment).
Supranational and ECU Obligations. The Fund may invest in securities
issued by supranational organizations, which include organizations such as The
World Bank, the European Community, the European Coal and Steel Community and
the Asian Development Bank. The Fund may also invest in securities denominated
in the ECU, which is a "basket" consisting of specified amounts of the
currencies of certain member states of the European Community. These securities
are typically issued by European governments and supranational organizations.
U.S. Government Obligations. The Fund may invest in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.
Money Market Instruments. The Fund may invest in cash or high-quality,
short-term money market instruments. Such instruments may include U.S.
Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Repurchase Agreements, Securities Loans and Forward Commitments. The Fund
may enter into agreements to purchase and resell securities at an agreed-upon
price and time. The Fund also has the ability to lend portfolio securities in an
amount equal to not more than 30% of its total assets to generate additional
income. These transactions must be fully collateralized at all times. The Fund
may purchase securities for delivery at a future date, which may increase its
overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date. These transactions involve
some risk to the Fund if the other party should default on its obligation and
the Fund is delayed or prevented from recovering the collateral or completing
the transaction.
Borrowings and Reverse Repurchase Agreements. The Fund may borrow money
from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Fund may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Fund enters into a reverse repurchase agreement, it
will establish a segregated account in which it will maintain liquid assets on a
daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Fund would be required to pay interest on amounts
obtained through reverse repurchase agreements, which are considered borrowings
under federal securities laws.
Stand-By Commitments. The Fund may enter into put transactions, including
transactions sometimes referred to as stand-by commitments, with respect to
securities in its portfolio. In these transactions, the Fund would acquire the
right to sell a security at an agreed upon price within a specified period prior
to its maturity date. These transactions involve some risk to the Fund if the
other party should default on its obligation and the Fund is delayed or
prevented from recovering the collateral or completing the transaction.
Acquisition of puts will have the effect of increasing the cost of the
securities subject to the put and thereby reducing the yields otherwise
available from such securities.
Convertible Securities. The Fund may invest in convertible securities,
which are securities generally offering fixed interest or dividend yields which
may be converted either at a stated price or stated rate for common
-7-
<PAGE>
or preferred stock. Although to a lesser extent than with fixed-income
securities generally, the market value of convertible securities tends to
decline as interest rates increase, and increase as interest rates decline.
Because of the conversion feature, the market value of convertible securities
also tends to vary with fluctuations in the market value of the underlying
common or preferred stock.
Other Investment Companies. The Fund may invest up to 10% of its total
assets in shares of other investment companies, subject to applicable regulatory
limitations.
Zero Coupon Securities, Payment-in-Kind Obligations and Stripped
Obligations. The Fund may invest in zero coupon securities issued by
governmental and private issuers. Zero coupon securities are debt securities
that do not pay regular interest payments, and instead are sold at substantial
discounts from their value at maturity. Payment-in-kind obligations are
obligations on which the interest is payable in additional securities rather
than cash. The Fund may also invest in stripped obligations, which are
separately traded principal and interest components of an underlying obligation.
The value of these instruments tends to fluctuate more in response to changes in
interest rates than the value of ordinary interest-paying debt securities with
similar maturities. The risk is greater when the period to maturity is longer.
Inverse Floaters and Interest Rate Caps. The Fund may invest in inverse
floaters and in securities with interest rate caps. Inverse floaters are
instruments whose interest rates bear an inverse relationship to the interest
rate on another security or the value of an index, and their price may be
considerably more volatile than a fixed-rate security. Interest rate caps are
financial instruments under which payments occur if an interest rate index
exceeds a certain predetermined interest rate level, known as the cap rate,
which is tied to a specific index. These financial products will be more
volatile in price than securities which do not include such a structure.
Mortgage-Related Securities. The Fund may invest in mortgage-related
securities. Mortgage pass-through securities are securities representing
interests in "pools" of mortgages in which payments of both interest and
principal on the securities are made monthly, in effect "passing through"
monthly payments made by the individual borrowers on the residential mortgage
loans which underlie the securities. Early repayment of principal on mortgage
pass-through securities held by the Fund (due to prepayments of principal on the
underlying mortgage loans) may result in a lower rate of return when the Fund
reinvests such principal. In addition, if the Fund purchased the securities at a
premium, early repayment would cause the value of the premium to be lost. Like
other fixed-income securities, when interest rates rise the value of a
mortgage-related security generally will decline; however, when interest rates
decline, the value of mortgage-related securities with prepayment features may
not increase as much as other fixed-income securities.
Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by the
U.S. Government, or by agencies or instrumentalities of the U.S. Government
(which guarantees are supported only by the discretionary authority of the U.S.
Government to purchase the agency's obligations). Mortgage pass-through
securities created by nongovernmental issuers may be supported by various forms
of insurance or guarantees.
The Fund may also invest in investment grade Collateralized Mortgage
Obligations ("CMOs"), which are hybrid instruments with characteristics of both
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal on a CMO are paid, in most cases, monthly. CMOs
may be collateralized by whole mortgage loans but are more typically
collateralized by portfolios of mortgage pass-through securities guaranteed by
the U.S. Government or its agencies or instrumentalities. CMOs are structured
into multiple classes, with each class having a different expected average life
and/or stated maturity. Monthly payments of principal, including prepayments,
are allocated to different classes in accordance with the terms of the
instruments, and changes in prepayment rates or assumptions may significantly
affect the expected average life and value of a particular class.
-8-
<PAGE>
The Fund expects that governmental, government-related or private entities
may create other mortgage-related securities in addition to those described
above. As new types of mortgage-related securities are developed and offered to
investors, the Fund will consider making investments in such securities.
Asset-Backed Securities. The Fund may invest in asset-backed securities,
which represent a participation in, or are secured by and payable from, a stream
of payments generated by particular assets, most often a pool of assets similar
to one another, such as motor vehicle receivables or credit card receivables.
Derivatives and Related Instruments. The Fund may invest its assets in
derivative and related instruments to hedge various market risks or to increase
the Fund's income or gain. Some of these instruments will be subject to asset
segregation requirements to cover the Fund's obligations. The Fund may (i)
purchase, write and exercise call and put options on securities and securities
indexes (including using options in combination with securities, other options
or derivative instruments); (ii) enter into swaps, futures contracts and options
on futures contracts; (iii) employ forward currency and interest rate contracts;
and (iv) purchase and sell structured products, which are instruments designed
to restructure or reflect the characteristics of certain other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Fund invests may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of the Fund to successfully utilize
these instruments may depend in part upon the ability of the Fund's advisers to
forecast these factors correctly. Inaccurate forecasts could expose the Fund to
a risk of loss. There can be no guarantee that there will be a correlation
between price movements in a hedging instrument and in the portfolio assets
being hedged. The Fund is not required to use any hedging strategies. Hedging
strategies, while reducing risk of loss, can also reduce the opportunity for
gain. Derivatives transactions not involving hedging may have speculative
characteristics, involve leverage and result in more risk to the Fund than
hedging strategies using the same instruments. There can be no assurance that a
liquid market will exist at a time when the Fund seeks to close out a
derivatives position. Activities of large traders in the futures and securities
markets involving arbitrage, "program trading," and other investment strategies
may cause price distortions in derivatives markets. In certain instances,
particularly those involving over-the-counter transactions or forward contracts,
there is a greater potential that a counterparty or broker may default. In the
event of a default, the Fund may experience a loss. For additional information
concerning derivatives, related instruments and the associated risks, see the
SAI.
Portfolio Turnover. The frequency of the Fund's portfolio transactions
will vary from year to year. The Fund's investment policies may lead to
frequent changes in investments, particularly in periods of rapidly changing
market conditions. High portfolio turnover rates would generally result in
higher transaction costs, including brokerage commissions or dealer mark-ups,
and would make it more difficult for the Fund to qualify as a registered
investment company under federal tax law. See "How Distributions are Made; Tax
Information" and "Other Information Concerning the Fund--Certain Regulatory
Matters."
Limiting Investment Risks
Specific investment restrictions help the Fund limit investment risks for
its shareholders. These restrictions prohibit the Fund from: (a) with respect to
75% of its total assets, holding more than 10% of the voting securities of any
issuer or investing more than 5% of its total assets in the securities of any
one issuer (other than U.S. Government obligations); (b) investing more than 15%
of its net assets in illiquid securities (which include securities restricted as
to resale unless they are determined to be readily marketable in accordance with
procedures established by the Board of Trustees); or (c) investing more than 25%
of its total asset in any one industry. A complete description of these and
other investment policies is included in the SAI. Except for the Fund's
investment objective, restriction (c) above and investment policies designated
as fundamental in the SAI, the Fund's investment policies are not fundamental.
The Trustees may change any non-fundamental investment policy without
shareholder approval.
Risk Factors
The Fund does not constitute a balanced or complete investment program,
and the net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities in the Fund's portfolio. The
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Fund is subject to the general risks and considerations associated with equity
and fixed income investing, as well as the risks discussed herein.
The performance of the Fund depends in part on interest rate changes. As
interest rates increase, the value of the fixed income securities held by the
Fund tends to decrease. The performance of the Fund will also depend on the
quality of its investments. While securities issued or guaranteed by the U.S.
Government generally are of high quality, the other fixed income securities in
which the Fund may invest, while of investment-grade quality, may be of lesser
credit quality. Securities rated in the category Baa by Moody's or BBB by S&P
lack certain investment characteristics and may have speculative
characteristics.
Some of the securities in which the Fund may invest may be of smaller
companies. The securities of smaller companies often trade less frequently and
in more limited volume, and may be subject to more abrupt or erratic price
movements, than securities of larger, more established companies. Such companies
may have limited product lines, markets or financial resources, or may depend on
a limited management group.
For a discussion of certain other risks associated with the Fund's
additional investment activities, see "Other Investment Practices" above.
MANAGEMENT
The Fund's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the Fund
pursuant to an Investment Advisory Agreement and has overall responsibility for
investment decisions of the Fund, subject to the oversight of the Board of
Trustees. Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation,
a bank holding company. Chase and its predecessors have over 100 years of money
management experience. For its investment advisory services to the Fund, Chase
is entitled to receive an annual fee computed daily and paid monthly based at an
annual rate equal to 0.50% of the Fund's average daily net assets. Chase is
located at 270 Park Avenue, New York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Fund pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly-owned operating subsidiary of
Chase. CAM makes investment decisions for the Fund on a day-to-day basis. For
these services, CAM is entitled to receive a fee, payable by Chase from its
advisory fee, at an annual rate equal to 0.25% of the Fund's average daily net
assets. CAM was recently formed for the purpose of providing discretionary
investment advisory services to institutional clients and to consolidate Chase's
investment management function. The same individuals who serve as portfolio
managers for Chase also serve as portfolio managers for CAM. CAM is located at
1211 Avenue of the Americas, New York, New York 10036.
Portfolio Managers. Alex Powers and Greg Adams, Vice Presidents of Chase,
have been responsible for the day-to-day management of the Fund's portfolio
since November 1994 and its inception in 1993, respectively. Mr. Powers is
responsible for the fixed-income trading for the Fund and manages the Vista U.S.
Treasury Income Fund, as well as various individual and institutional accounts.
Mr. Powers is part of a team responsible for fixed-income strategy, research and
trading with Chase. Mr. Adams joined Chase in 1987 and oversees the equity
trading of the Fund and co-manages the Vista Growth and Income Fund.
ABOUT YOUR INVESTMENT
Alternative Sales Arrangements
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Class A shares. An investor who purchases Class A shares pays a sales
charge at the time of purchase. As a result, Class A shares are not subject to
any sales charges when they are redeemed. Certain purchases of Class A shares
qualify for reduced sales charges. Class A shares have lower combined 12b-1 and
service fees than Class B shares. See "How to Buy, Sell and Exchange Shares" and
"Other Information Concerning the Fund."
Class B shares. Class B shares are sold without an initial sales charge,
but are subject to a contingent deferred sales charge ("CDSC") if redeemed
within a specified period after purchase. Class B shares also have higher
combined 12b-1 and service fees than Class A shares.
Class B shares automatically convert into Class A shares, based on relative
net asset value, at the beginning of the ninth year after purchase. For more
information about the conversion of Class B shares, see the SAI. This discussion
will include information about how shares acquired through reinvestment of
distributions are treated for conversion purposes. Class B shares provide an
investor the benefit of putting all of the investor's dollars to work from the
time the investment is made. Until conversion, Class B shares will have a higher
expense ratio and pay lower dividends than Class A shares because of the higher
combined 12b-1 and service fees. See "How to Buy, Sell and Exchange Shares" and
"Other Information Concerning the Fund."
Which arrangement is best for you? The decision as to which class of
shares provides a more suitable investment for an investor depends on a number
of factors, including the amount and intended length of the investment.
Investors making investments that qualify for reduced sales charges might
consider Class A shares. Investors who prefer not to pay an initial sales charge
might consider Class B shares. In almost all cases, investors planning to
purchase $250,000 or more of the Fund's shares will pay lower aggregate charges
and expenses by purchasing Class A shares.
HOW TO BUY, SELL AND EXCHANGE SHARES
How to Buy Shares
You can open a Fund account with as little as $2,500 ($1,000 for IRAs,
SEP-IRAs and the Systematic Investment Plan) and make additional investments at
any time with as little as $100. You can buy Fund shares three ways--through an
investment representative, through the Fund's distributor by calling the Vista
Service Center, or through the Systematic Investment Plan.
All purchases made by check should be in U.S. dollars and made payable to
the Vista Funds. Third party checks, credit cards and cash will not be accepted.
The Fund reserves the right to reject any purchase order or cease offering
shares for purchase at any time. When purchases are made by check, redemptions
will not be allowed until clearance of the purchase check, which may take 15
calendar days or longer. In addition, the redemption of shares purchased through
ACH will not be allowed until clearance of your payment which may take 7
business days or longer.
Buying shares through the Fund's distributor. Complete and return the
enclosed application and your check in the amount you wish to invest to the
Vista Service Center.
Buying shares through systematic investing. You can make regular
investments of $100 or more per transaction through automatic periodic deduction
from your bank checking or savings account. Shareholders electing to start this
Systematic Investment Plan when opening an account should complete Section 8 of
the account application. Current shareholders may begin such a plan at any time
by sending a signed letter with signature guarantee and a deposit slip or voided
check to the Vista Service Center. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
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Shares are sold at the public offering price based on the net asset value
next determined after the Vista Service Center receives your order in proper
form. In most cases, in order to receive that day's public offering price, the
Vista Service Center must receive your order before the close of regular trading
on the New York Stock Exchange. If you buy shares through your investment
representative, the representative must receive your order before the close of
regular trading on the New York Stock Exchange to receive that day's public
offering price. Orders for shares are accepted by the Fund after funds are
converted to federal funds. Orders paid by check and received by 2:00 p.m.,
Eastern Time will generally be available for the purchase of shares the
following business day.
If you are considering redeeming or exchanging shares or transferring
shares to another person shortly after purchase, you should pay for those shares
with a certified check to avoid any delay in redemption, exchange or transfer.
Otherwise the Fund may delay payment until the purchase price of those shares
has been collected or, if you redeem by telephone, until 15 calendar days after
the purchase date. To eliminate the need for safekeeping, the Fund will not
issue certificates for your Class A shares unless you request them. Due to the
conversion feature of Class B shares, certificates for Class B shares will not
be issued and all Class B shares will be held in book entry form.
Class A Shares
The public offering price of Class A shares is the net asset value plus a
sales charge that varies depending on the size of your purchase. The Fund
receives the net asset value. The sales charge is allocated between your
broker-dealer and the Fund's distributor as shown in the following table, except
when the Fund's distributor, in its discretion, allocates the entire amount to
your broker-dealer.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Sales charge as a
percentage of: Amount of sales charge
Amount of transaction at Offering Net amount reallowed to dealers as a
offering price($) price invested percentage of offering price
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Under 100,000 4.50 4.71 4.00
- -------------------------------------------------------------------------------
100,000 but under 250,000 3.75 3.90 3.25
- -------------------------------------------------------------------------------
250,000 but under 500,000 2.50 2.56 2.25
- -------------------------------------------------------------------------------
500,000 but under 1,000,000 2.00 2.04 1.75
- -------------------------------------------------------------------------------
</TABLE>
There is no initial sales charge on purchases of Class A shares of $1 million
or more.
The Fund's distributor pays broker-dealers commissions on net sales of
Class A shares of $1 million or more based on an investor's cumulative
purchases. Such commissions are paid at the rate of 0.75% of the amount under
$2.5 million, 0.50% of the next $7.5 million, 0.25% of the next $40 million and
0.15% thereafter. The Fund's distributor may withhold such payments with respect
to short-term investments.
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<PAGE>
Class B Shares
Class B shares are sold without an initial sales charge, although a CDSC
will be imposed if you redeem shares within a specified period after purchase,
as shown in the table below. The following types of shares may be redeemed
without charge at any time: (i) shares acquired by reinvestment of distributions
and (ii) shares otherwise exempt from the CDSC, as described below. For other
shares, the amount of the charge is determined as a percentage of the lesser of
the current market value or the purchase price of shares being redeemed.
Year 1 2 3 4 5 6 7 8+
- --------------------------------------------------------------
CDSC 5% 4% 3% 3% 2% 1% 0% 0%
In determining whether a CDSC is payable on any redemption, the Fund will
first redeem shares not subject to any charge, and then shares held longest
during the CDSC period. When a share that has appreciated in value is redeemed
during the CDSC period, a CDSC is assessed only on its initial purchase price.
For information on how sales charges are calculated if you exchange your shares,
see "How to Exchange Your Shares." The Fund's distributor pays broker-dealers a
commission of 4.00% of the offering price on sales of Class B shares, and the
distributor receives the entire amount of any CDSC you pay.
General
You may be eligible to buy Class A shares at reduced sales charges.
Consult your investment representative or the Vista Service Center for details
about Vista's combined purchase privilege, cumulative quantity discount,
statement of intention, group sales plan, employee benefit plans, and other
plans. Descriptions are also included in the enclosed application and in the
SAI. In addition, sales charges will not apply to shares purchased with
redemption proceeds received within the prior ninety days from non-Vista mutual
funds on which the investor paid a front-end or contingent deferred sales
charge.
A participant-directed employee benefit plan participating in a
"multi-fund" program approved by the Board of Trustees may include amounts
invested in the other mutual funds participating in such program for purposes of
determining whether the plan may purchase Class A shares at net asset value.
These investments will also be included for purposes of the discount privileges
and programs described above.
The Fund may sell Class A shares at net asset value without an initial
sales charge to the current and retired Trustees (and their immediate families),
current and retired employees (and their immediate families) of Chase, the
Fund's distributor and transfer agent or any affiliates or subsidiaries thereof,
registered representatives and other employees (and their immediate families) of
broker-dealers having selected dealer agreements with the Fund's distributor,
employees (and their immediate families) of financial institutions having
selected dealer agreements with the Fund's distributor (or otherwise having an
arrangement with a broker-dealer or financial institution with respect to sales
of Vista fund shares) financial institution trust departments investing an
aggregate of $1 million or more in the Vista Family of Funds and clients of
certain administrators of tax-qualified plans when proceeds from repayments of
loans to participants are invested (or reinvested) in the Vista Family of Funds.
No initial sales charge will apply to the purchase of Class A shares of
the Fund by an investor seeking to invest the proceeds of a qualified retirement
plan where a portion of the plan was invested in the Vista Family of Funds, any
qualified retirement plan with 50 or more participants, or an individual
participant in a tax-qualified plan making a tax-free rollover or transfer of
assets from the plan in which Chase or an affiliate serves as trustee or
custodian of the plan or manages some portion of the plan's assets.
Purchases of Class A shares of the Fund may be made with no initial sales
charge through an investment adviser or financial planner that charges a fee for
its services. Purchases of Class A shares of the Fund may be made with no
initial sales charge (i) by an investment adviser, broker or financial planner,
provided arrangements
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<PAGE>
are preapproved and purchases are placed through an omnibus account with the
Fund or (ii) by clients of such investment adviser or financial planner who
place trades for their own accounts, if such accounts are linked to a master
account of such investment adviser or financial planner on the books and records
of the broker or agent. Such purchases may be made for retirement and deferred
compensation plans and trusts used to fund those plans.
Purchases of Class A shares of the Fund may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary exercising investment discretion, provided that
appropriate notification of such fiduciary relationship is reported at the time
of the investment to the Fund, the Fund's distributor or the Vista Service
Center.
Shareholders of record of any Vista fund as of November 30, 1990 and
certain immediate family members may purchase Class A shares of the Fund with no
initial sales charge for as long as they continue to own Class A shares of any
Vista fund, provided there is no change in account registration. Shareholders of
record of any portfolio of The Hanover Funds, Inc. or The Hanover Investment
Funds, Inc. as of May 3, 1996 and certain related investors may purchase Class A
shares of the Fund with no initial sales charge for as long as they continue to
own shares of any Vista fund following this date, provided there is no change in
account registration.
The Fund may sell Class A shares at net asset value without an initial
sales charge in connection with the acquisition by the Fund of assets of an
investment company or personal holding company. The CDSC will be waived on
redemption of Class B shares arising out of death or disability or in connection
with certain withdrawals from IRA or other retirement plans. Up to 12% of the
value of Class B shares subject to a systematic withdrawal plan may also be
redeemed each year without a CDSC, provided that the Class B account had a
minimum balance of $20,000 at the time the systematic withdrawal plan was
established. The SAI contains additional information about purchasing the Fund's
shares at reduced sales charges.
The Fund reserves the right to change any of these policies on purchases
without an initial sales charge at any time and may reject any such purchase
request.
Shareholders of other Vista funds may be entitled to exchange their shares
for, or reinvest distributions from their funds in, shares of the Fund at net
asset value.
How to Sell Shares
You can sell your shares to the Fund any day the New York Stock Exchange
is open, either directly to the Fund or through your investment representative.
The Fund will only forward redemption payments on shares for which it has
collected payment of the purchase price.
Selling shares directly to the Fund. Send a signed letter of instruction
to the Vista Service Center, along with any certificates that represent shares
you want to sell. The price you will receive is the next net asset value
calculated after the Fund receives your request in proper form, less any
applicable CDSC. In order to receive that day's net asset value, the Vista
Service Center must receive your request before the close of regular trading on
the New York Stock Exchange.
If you sell shares having a net asset value of $100,000 or more, the
signatures of registered owners or their legal representatives must be
guaranteed by a bank, broker-dealer or certain other financial institutions. See
the SAI for more information about where to obtain a signature guarantee.
If you want your redemption proceeds sent to an address other than your
address as it appears on Vista's records, a signature guarantee is required. The
Fund may require additional documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Vista Service Center for details.
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<PAGE>
The Fund generally sends you payment for your shares the business day
after your request is received, assuming the Fund has collected payment of the
purchase price of your shares. Under unusual circumstances, the Fund may suspend
redemptions, or postpone payment for more than seven days, as permitted by
federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.
The Vista Service Center will employ these and other reasonable
procedures to confirm that instructions communicated by telephone are genuine;
if it fails to employ reasonable procedures, the Fund may be liable for any
losses due to unauthorized or fraudulent instructions. An investor agrees,
however, that to the extent permitted by applicable law, neither the Fund nor
its agents will be liable for any loss, liability, cost or expense arising out
of any redemption request, including any fraudulent or unauthorized request. For
information, consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you
may experience delays in contacting the Vista Service Center by telephone. In
this event, you may wish to submit a written redemption request, as described
above, or contact your investment representative. The Telephone Redemption
Privilege is not available if you were issued certificates for shares that
remain outstanding. The Telephone Redemption Privilege may be modified or
terminated without notice.
Systematic withdrawal. You can make regular withdrawals of $50 or more
($100 or more for Class B accounts) monthly, quarterly or semiannually. A
minimum account balance of $5,000 is required to establish a systematic
withdrawal plan for Class A accounts. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Selling shares through your investment representative. Your investment
representative must receive your request before the close of regular trading on
the New York Stock Exchange to receive that day's net asset value. Your
investment representative will be responsible for furnishing all necessary
documentation to the Vista Service Center, and may charge you for its services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $500 or if you purchase through the Systematic Investment
Plan and fail to meet the Fund's investment minimum within a twelve month
period. In the event of any such redemption, you will receive at least 60 days
notice prior to the redemption. In the event the Fund redeems Class B shares
pursuant to this provision, no CDSC will be imposed.
How to Exchange Your Shares
You can exchange your shares for shares of the same class of certain
other Vista funds at net asset value beginning 15 days after purchase. Not all
Vista funds offer all classes of shares. The prospectus of the other Vista fund
into which shares are being exchanged should be read carefully and retained for
future reference. If you exchange shares subject to a CDSC, the transaction will
not be subject to the CDSC. However, when you redeem the shares acquired through
the exchange, the redemption may be subject to the CDSC, depending upon when you
originally purchased the shares. The CDSC will be computed using the schedule of
any fund into or from which you have exchanged your shares that would result in
your paying the highest CDSC applicable to your class of shares. In computing
the CDSC, the length of time you have owned your shares will be measured from
the date of original purchase and will not be affected by any exchange.
An exchange of Class B shares into any of the Vista money market funds
other than the Class B shares of the Vista Prime Money Market Fund will be
treated as a redemption -- and therefore subject to the conditions of the CDSC
- -- and a subsequent purchase. Class B shares of any Vista non-money market fund
may be exchanged
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<PAGE>
into the Class B shares of the Vista Prime Money Market Fund in order to
continue the aging of the initial purchase of such shares.
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the amount or
number of exchanges or reject any exchange. In addition, any shareholder who
makes more than ten exchanges of shares involving the Fund in a year or three in
a calendar quarter will be charged a $5.00 administration fee for each such
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult the Vista Service Center before requesting an exchange.
See the SAI to find out more about the exchange privilege.
Reinstatement privilege. Class A shareholders have a one time privilege of
reinstating their investment in the Fund at net asset value next determined
subject to written request within 90 calendar days of the redemption,
accompanied by payment for the shares (not in excess of the redemption). Class B
shareholders who have redeemed their shares and paid a CDSC with such redemption
may purchase Class A shares with no initial sales charge (in an amount not in
excess of their redemption proceeds) if the purchase occurs within 90 days of
the redemption of the Class B shares.
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each business day of the Fund, by
dividing the net assets of the Fund attributable to that class by the total
number of outstanding shares of that class. Values of assets held by the Fund
are determined on the basis of their market or other fair value, as described
in the SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund distributes any net investment income at least quarterly and any
net realized capital gains at least annually. Distributions from capital gains
are made after applying any available capital loss carryovers. Distributions
paid by the Fund with respect to Class A shares will generally be greater than
those paid with respect to Class B shares because expenses attributable to Class
B shares will generally be higher.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares without a sales charge; (2) receive
distributions from net investment income in cash or by ACH to a pre-established
bank account while reinvesting capital gains distributions in additional shares
without a sales charge; or (3) receive all distributions in cash or by ACH. You
can change your distribution option by notifying the Vista Service Center in
writing. If you do not select an option when you open your account, all
distributions will be reinvested. All distributions not paid in cash or by ACH
will be reinvested in shares
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<PAGE>
of the class on which the distributions are paid. You will receive a statement
confirming reinvestment of distributions in additional Fund shares promptly
following the quarter in which the reinvestment occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Distribution Plans
The Fund's distributor is Vista Fund Distributors, Inc. ("VFD"). VFD is a
subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase. The Trust
has adopted Rule 12b-1 distribution plans for Class A and Class B shares which
provide that the Fund will pay distribution fees at annual rates of up to 0.25%
and 0.75% of the average daily net assets attributable to Class A and Class B
shares of the Fund, respectively. Payments under the distribution plans shall be
used to compensate or reimburse the Fund's distributor and broker-dealers for
services provided and expenses incurred in connection with the sale of Class A
and Class B shares, and are not tied to the amount of actual expenses incurred.
Payments may be used to compensate broker-dealers with trail or maintenance
commissions at an annual rate of up to 0.25% of the average daily net asset
value of Class A or Class B shares maintained in the Fund by customers of these
broker-dealers. Trail or maintenance commissions are paid to broker-dealers
beginning the 13th month following the purchase of shares by their customers.
Some activities intended to promote the sale of Class A and Class B shares will
be conducted generally by the Vista Family of Funds, and activities intended to
promote the Fund's Class A or Class B shares may also benefit the Fund's other
shares and other Vista funds.
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<PAGE>
VFD may provide promotional incentives to broker-dealers that meet
specified sales targets for one or more Vista funds. These incentives may
include gifts of up to $100 per person annually; an occasional meal, ticket to a
sporting event or theater or entertainment for broker-dealers and their guests;
and payment or reimbursement for travel expenses, including lodging and meals,
in connection with attendance at training and educational meetings within and
outside the U.S.
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Class A or Class B shares of the Fund. These
services include assisting with purchase and redemption transactions,
maintaining shareholder accounts and records, furnishing customer statements,
transmitting shareholder reports and communications to customers and other
similar shareholder liaison services. For performing these services, each
shareholder servicing agent receives an annual fee of up to 0.25% of the average
daily net assets of Class A and Class B shares of the Fund held by investors for
whom the shareholder servicing agent maintains a servicing relationship.
Shareholder servicing agents may subcontract with other parties for the
provision of shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator and Sub-Administrator
Chase acts as the Fund's administrator and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets.
VFD provides certain sub-administrative services to the Fund pursuant to
a distribution and sub-administration agreement and is entitled to receive a
fee for these services from the Fund at an annual rate equal to 0.05% of the
Fund's average daily net assets. VFD has agreed to use a portion of this fee to
pay for certain expenses incurred in connection with organizing new series of
the Trust and certain other ongoing expenses of the Trust. VFD is located at
101 Park Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors
-18-
<PAGE>
and to government offices and commissions; expenses of meetings of investors;
fees and expenses of independent accountants, of legal counsel and of any
transfer agent, registrar or dividend disbursing agent of the Trust; insurance
premiums; and expenses of calculating the net asset value of, and the net income
on, shares of the Fund. Shareholder servicing and distribution fees are
allocated to specific classes of the Fund. In addition, the Fund may allocate
transfer agency and certain other expenses by class. Service providers to the
Fund may, from time to time, voluntarily waive all or a portion of any fees to
which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Shares have no
preemptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of the Fund generally vote
together except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class.
The Fund issues multiple classes of shares. This Prospectus relates to
Class A and Class B shares of the Fund. The Fund may offer other classes of
shares in addition to these classes. The categories of investors that are
eligible to purchase shares and minimum investment requirements may differ for
each class of Fund shares. In addition, other classes of Fund shares may be
subject to differences in sales charge arrangements, ongoing distribution and
service fee levels, and levels of certain other expenses, which would affect the
relative performance of the different classes. Investors may call 1-800-34-VISTA
to obtain additional information about other classes of shares of the Fund that
are offered. Any person entitled to receive compensation for selling or
servicing shares of the Fund may receive different levels of compensation with
respect to one class of shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
-19-
<PAGE>
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income per share during a recent 30-day period by the
maximum public offering price per share of such class on the last day of that
period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the maximum public offering price (in the case of Class A shares) or
reflecting the deduction of any applicable contingent deferred sales charge (in
the case of Class B shares). Total return may also be presented for other
periods or without reflecting sales charges. Any quotation of investment
performance not reflecting the maximum initial sales charge or contingent
deferred sales charge would be reduced if such sales charges were used.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other mutual
funds and other investment vehicles. Quotation of investment performance for any
period when a fee waiver or expense limitation was in effect will be greater
than if the waiver or limitation had not been in effect. The Fund's performance
may be compared to other mutual funds, relevant indices and rankings prepared by
independent services. See the SAI.
-20-
<PAGE>
MAKE THE MOST OF YOUR VISTA PRIVILEGES
The following services are available to you as a Vista mutual fund shareholder.
o SYSTEMATIC INVESTMENT PLAN -- Invest as much as you wish ($100 or more) in
the first or third week of any month. The amount will be automatically
transferred from your checking or savings account.
o SYSTEMATIC WITHDRAWAL -- Make regular withdrawals of $50 or more ($100 or
more for Class B accounts) monthly, quarterly or semiannually. A minimum
account balance of $5,000 is required to establish a systematic withdrawal
plan for Class A accounts.
o SYSTEMATIC EXCHANGE -- Transfer assets automatically from one Vista
account to another on a regular, prearranged basis. There is no additional
charge for this service.
o FREE EXCHANGE PRIVILEGE -- Exchange money between Vista funds in the same
class of shares without charge. The exchange privilege allows you to
adjust your investments as your objectives change.
Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange and systematic withdrawal or exchange.
o REINSTATEMENT PRIVILEGE -- Class A shareholders have a one time privilege
of reinstating their investment in the Fund at net asset value next
determined subject to written request within 90 calendar days of the
redemption, accompanied by payment for the shares (not in excess of the
redemption).
Class B shareholders who have redeemed their shares and paid a CDSC with
such redemption may purchase Class A shares with no initial sales charge
(in an amount not in excess of their redemption proceeds) if the purchase
occurs within 90 days of the redemption of the Class B shares.
For more information about any of these services and privileges, call your
shareholder servicing agent, investment representative or the Vista Service
Center at 1-800-34-VISTA. These privileges are subject to change or termination.
-21-
<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
-22-
<PAGE>
PROSPECTUS
VISTA[SM] EQUITY INCOME FUND
Class A and B Shares
May 6, 1996
Investment Strategy: Income. Capital appreciation is a secondary consideration.
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-34-VISTA. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary .....................................................
The expenses you might pay on your Fund investment, including examples.
Financial Highlights ................................................
How the Fund has performed
Fund Objective.......................................................
Investment Policies .................................................
The kinds of securities in which the Fund invests,
investment policies and techniques, and risks
Management ..........................................................
Chase Manhattan Bank, the Fund's adviser; Chase Asset Management,
the Fund's sub-adviser, and the individuals who manage the Fund
About Your Investment ...............................................
Alternative sales arrangements
How to Buy, Sell and Exchange Shares.................................
How the Fund Values its Shares.......................................
How Distributions are Made; Tax Information .........................
How the Fund distributes its earnings, and
tax treatment related to those earnings
Other Information Concerning the Fund ...............................
Distribution plans, shareholder servicing agents, administration,
custodian, expenses, organization and regulatory matters
Performance Information .............................................
How performance is determined, stated and/or advertised
Make the Most of Your Vista Privileges...............................
-2-
<PAGE>
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the Fund based on
expenses incurred in the most recent fiscal year. The examples show the
cumulative expenses attributable to a hypothetical $1,000 investment over
specified periods.
Class A Class B
Shareholder Transaction Expenses Shares Shares
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)................ 4.50% None
Maximum Deferred Sales Charge
(as a percentage of the lower of original
purchase price or redemption proceeds)(*).......... None 5.00%
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee (after estimated waiver) (**) 0.00% 0.00%
12b-1 Fee(***)..................................... 0.25% 0.75%
Shareholder Servicing Fee (after estimated waiver,
where indicated) .................................. 0.00%(**) 0.25%
Other Expenses (after estimated waiver) (**)....... 1.25% 1.25%
----- -----
Total Fund Operating Expenses
(after waivers of fees)(**) ....................... 1.50% 2.25%
===== =====
Examples
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares(+)................ $60 $90 $123 $216
Class B Shares:
Assuming complete
redemption at the
end of the
period(++)(+++)................ $74 $103 $143 $240
Assuming no
redemptions (+++).............. $23 $70 $120 $240
- -----------------------
-3-
<PAGE>
* The maximum deferred sales charge on Class B shares applies to redemptions
during the first year after purchase; the charge generally declines by 1%
annually thereafter (except in the fourth year), reaching zero after six
years. See "How to Buy, Sell and Exchange Shares."
** Reflects current waiver arrangements to maintain Total Fund Operating
Expenses at the levels indicated in the table above. Absent such waivers,
the Investment Advisory Fee and Other Expenses would be 0.40% and 1.35%,
respectively, for Class A and Class B shares, the Shareholder Servicing Fee
would be 0.25% for Class A shares, and Total Fund Operating Expenses would
be 2.25% and 2.75% for Class A and Class B shares, respectively.
*** Long-term shareholders in mutual funds with 12b-1 fees, such as Class A and
Class B shareholders of the Fund, may pay more than the economic equivalent
of the maximum front-end sales charge permitted by rules of the National
Association of Securities Dealers, Inc.
+ Assumes deduction at the time of purchase of the maximum sales charge.
++ Assumes deduction at the time of redemption of the maximum applicable
deferred sales charge.
+++ Ten-year figures assume conversion of Class B shares to Class A shares at
the beginning of the ninth year after purchase. See "How to Buy, Sell and
Exchange Shares."
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
-4-
<PAGE>
FINANCIAL HIGHLIGHTS
The table set forth below provides selected per share data and ratios for
a Class A share outstanding for each period shown. This information is
supplemented by and should be read in conjunction with the financial statements
and accompanying notes appearing in the Fund's Annual Report to Shareholders for
the fiscal year ended October 31, 1995, which is incorporated by reference into
the SAI. Shareholders may obtain a copy of this annual report by contacting the
Fund or their Shareholder Servicing Agent. The financial statements and notes,
as well as the financial information set forth in the table below, have been
audited by Price Waterhouse LLP, independent accountants, whose report thereon
is also included in the Annual Report to Shareholders. No Class B shares were
publicly issued prior to the date hereof.
<TABLE>
<CAPTION>
VISTA EQUITY INCOME FUND
------------------------------
Year Ended 07/15/93*
--------------------- through
PER SHARE OPERATING PERFORMANCE 10/31/95 10/31/94 10/31/93
- ------------------------------- -------- -------- --------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period......... $12.12 $13.84 $13.14
------ ------ ------
Income From Investment Operations:
Net Investment Income.................. 0.347 0.290 0.078
Net Gains or (Losses) in Securities
(both realized and unrealized)......... 1.698 (0.477) 0.700
----- ------ -----
Total from Investment Operations 2.045 (0.187) 0.778
----- ------ -----
Less Distributions:
Dividends from Net Investment Income... 0.366 0.258 0.078
Distributions from Capital Gains....... 0.410 1.275 0.000
----- ----- -----
Total distributions.................... 0.776 1.533 0.078
----- ----- -----
Net Asset Value, End of Period............... $13.39 $12.12 $13.84
====== ====== ======
Total Return (1)............................. 17.97% (1.35%) 5.91%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted)...... $11,737 $11,409 $15,321
Ratio of Expenses to Average Net Assets#..... 1.50% 1.50% 1.50%
Ratio of Net Investment Income to Average
Net Assets#............................... 2.81% 2.31% 1.72%
Ratio of Expenses without waivers and
assumption of expenses to Average Net Assets# 2.19% 2.02% 2.40%
Ratio of Net Investment Income without
waivers and assumption of expenses to
Average Net Assets# 2.12% 1.79% 0.82%
Portfolio Turnover Rate...................... 91% 75% 54%
</TABLE>
- ------------
# Short periods have been annualized.
(1) Total return figures do not include the effect of any front-end sales load.
* Commencement of operations.
-5-
<PAGE>
FUND OBJECTIVE
Vista Equity Income Fund seeks to obtain income. The Fund pursues this
objective primarily by investing in income-producing equity securities. The Fund
is not intended to be a complete investment program, and there is no assurance
it will achieve its objective.
INVESTMENT POLICIES
Investment Approach
Under normal market conditions, the Fund will invest at least 65% of its
total assets in income-producing equity securities. Capital appreciation is a
secondary consideration. The income-producing equity securities in which the
Fund invests include common stocks, preferred stocks and convertible securities.
The Fund attempts to achieve a yield which exceeds the composite yield on the
securities comprising the Standard and Poor's 500 Stock Price Index.
It is anticipated that the major portion of the Fund's assets will be
invested in common stocks traded on a national securities exchange or on NASDAQ.
A significant portion of the Fund's assets may be invested in convertible bonds
or convertible preferred stock.
The Fund may invest any portion of its assets not invested as described
above in high quality money market instruments and repurchase agreements. For
temporary defensive purposes, the Fund may invest without limitation in these
instruments, as well as investment grade debt securities. To the extent that the
Fund departs from its investment policies during temporary defensive periods,
its investment objective may not be achieved.
The Fund is classified as a "diversified" fund under federal securities
law.
In lieu of investing directly, the Fund is authorized to seek to achieve
its objective by investing all of its investable assets in an investment company
having substantially the same investment objective and policies as the Fund.
Other Investment Practices
The Fund may also engage in the following investment practices, when
consistent with the Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI.
Foreign Securities. The Fund may invest up to 20% of its total assets in
foreign securities, including Depositary Receipts. Since foreign securities are
normally denominated and traded in foreign currencies, the values of the Fund's
foreign investments may be affected favorably or unfavorably by currency
exchange rates and exchange control regulations. There may be less information
publicly available about foreign companies than U.S. companies, and they are not
generally subject to accounting, auditing and financial reporting standards and
practices comparable to those in the U.S. The securities of foreign companies
may be less liquid and more volatile than the securities of comparable U.S.
companies. Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in payment or delivery of securities or in the
recovery of the Fund's assets held abroad) and expenses. It is possible that
nationalization or expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial instability and
diplomatic developments could affect the value of the Fund's investments in
certain foreign countries. Foreign laws may restrict the ability to invest in
certain issuers or countries and special tax considerations will apply to
foreign securities. The risks can increase if the Fund invests in securities of
issuers in emerging markets.
The Fund may invest its assets in securities of foreign issuers in the
form of American Depositary Receipts, European Depositary Receipts, Global
Depositary Receipts or other similar securities representing securities of
foreign issuers (collectively, "Depositary Receipts"). The Fund treats
Depositary Receipts as interests in the underlying securities for purposes of
its investment policies. The Fund will limit its investment in Depositary
Receipts not sponsored by the issuer of the underlying securities to no more
than 5% of the value of its net assets (at the time of investment).
-6-
<PAGE>
Supranational and ECU Obligations. The Portfolio may invest in securities
issued by supranational organizations, which include organizations such as The
World Bank, the European Community, the European Coal and Steel Community and
the Asian Development Bank. The Portfolio may also invest in securities
denominated in the ECU, which is a "basket" consisting of specified amounts of
the currencies of certain member states of the European Community. These
securities are typically issued by European governments and supranational
organizations.
Convertible Securities. The Fund may invest in convertible securities,
which are securities generally offering fixed interest or dividend yields which
may be converted either at a stated price or stated rate for common or preferred
stock. Although to a lesser extent than with fixed-income securities generally,
the market value of convertible securities tends to decline as interest rates
increase, and increase as interest rates decline. Because of the conversion
feature, the market value of convertible securities also tends to vary with
fluctuations in the market value of the underlying common or preferred stock.
Money Market Instruments. The Fund may invest in cash or high-quality,
short-term money market instruments. Such instruments may include U.S.
Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Investment Grade Debt Securities. Investment grade debt securities are
securities rated in the category BBB or higher by Standard & Poor's Corporation
("S&P"), or Baa or higher by Moody's Investors Services, Inc. ("Moody's") or the
equivalent by another national rating organization, or, if unrated, determined
by the advisers to be of comparable quality.
Repurchase Agreements, Securities Loans and Forward Commitments. The Fund
may enter into agreements to purchase and resell securities at an agreed-upon
price and time. The Fund also has the ability to lend portfolio securities in an
amount equal to not more than 30% of its total assets to generate additional
income. These transactions must be fully collateralized at all times. The Fund
may purchase securities for delivery at a future date, which may increase its
overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date. These transactions involve
some risk to the Fund if the other party should default on its obligation and
the Fund is delayed or prevented from recovering the collateral or completing
the transaction.
Borrowings and Reverse Repurchase Agreements. The Fund may borrow money
from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Fund may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Fund enters into a reverse repurchase agreement, it
will establish a segregated account in which it will maintain liquid assets on a
daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Fund would be required to pay interest on amounts
obtained through reverse repurchase agreements, which are considered borrowings
under federal securities laws.
Stand-By Commitments. The Fund may enter into put transactions, including
transactions sometimes referred to as stand-by commitments, with respect to
securities in its portfolio. In these transactions, the Fund would acquire the
right to sell a security at an agreed upon price within a specified period prior
to its maturity date. These transactions involve some risk to the Fund if the
other party should default on its obligation and the Fund is delayed or
prevented from recovering the collateral or completing the transaction.
Acquisition of puts will have the effect of increasing the cost of the
securities subject to the put and thereby reducing the yields otherwise
available from such securities.
Other Investment Companies. The Fund may invest up to 10% of its total
assets in shares of other investment companies, subject to applicable regulatory
limitations.
-7-
<PAGE>
STRIPS. The Fund may invest up to 20% of its total assets in separately
traded principal and interest components of securities backed by the full faith
and credit of the U.S. Government, including instruments known as "STRIPS". The
value of these instruments tends to fluctuate more in response to changes in
interest rates than the value of ordinary interest-paying debt securities with
similar maturities. The risk is greater when the period to maturity is longer.
Derivatives and Related Instruments. The Fund may invest its assets in
derivative and related instruments to hedge various market risks or to increase
the Fund's income or gain. Some of these instruments will be subject to asset
segregation requirements to cover the Fund's obligations. The Fund may (i)
purchase, write and exercise call and put options on securities and securities
indexes (including using options in combination with securities, other options
or derivative instruments); (ii) enter into swaps, futures contracts and options
on futures contracts; (iii) employ forward currency contracts; and (iv) purchase
and sell structured products, which are instruments designed to restructure or
reflect the characteristics of certain other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Fund invests may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of the Fund to successfully utilize
these instruments may depend in part upon the ability of the Fund's advisers to
forecast these factors correctly. Inaccurate forecasts could expose the Fund to
a risk of loss. There can be no guarantee that there will be a correlation
between price movements in a hedging instrument and in the portfolio assets
being hedged. The Fund is not required to use any hedging strategies. Hedging
strategies, while reducing risk of loss, can also reduce the opportunity for
gain. Derivatives transactions not involving hedging may have speculative
characteristics, involve leverage and result in more risk to the Fund than
hedging strategies using the same instruments. There can be no assurance that a
liquid market will exist at a time when the Fund seeks to close out a
derivatives position. Activities of large traders in the futures and securities
markets involving arbitrage, "program trading," and other investment strategies
may cause price distortions in derivatives markets. In certain instances,
particularly those involving over-the-counter transactions or forward contracts,
there is a greater potential that a counterparty or broker may default. In the
event of a default, the Fund may experience a loss. For additional information
concerning derivatives, related instruments and the associated risks, see the
SAI.
Portfolio Turnover. The frequency of the Fund's portfolio transactions will
vary from year to year. The Fund's investment policies may lead to frequent
changes in investments, particularly in periods of rapidly changing market
conditions. High portfolio turnover rates would generally result in higher
transaction costs, including brokerage commissions or dealer mark-ups, and would
make it more difficult for the Fund to qualify as a registered investment
company under federal tax law. See "How Distributions are Made; Tax Information"
and "Other Information Concerning the Fund--Certain Regulatory Matters."
Limiting Investment Risks
Investment restrictions help the Fund limit investment risks for its
shareholders. These restrictions prohibit the Fund from: (a) with respect to 75%
of its total assets, holding more than 10% of the voting securities of any
issuer or investing more than 5% of its total assets in the securities of any
one issuer (other than U.S. Government obligations); (b) investing more than 15%
of its net assets in illiquid securities (which include securities restricted as
to resale unless they are determined to be readily marketable in accordance with
procedures established by the Board of Trustees); or (c) investing more than 25%
of its total assets in any one industry. A complete description of these and
other investment policies is included in the SAI. Except for restriction (c)
above and investment policies designated as fundamental in the SAI, the Fund's
investment policies (including its investment objective) are not fundamental.
The Trustees may change any non-fundamental investment policy without
shareholder approval. However, in the event of a change in the Fund's investment
objective, shareholders will be given at least 30 days' prior written notice.
Risk Factors
The Fund does not constitute a balanced or complete investment program,
and the net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities in the Fund's portfolio. The
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Fund is subject to the general risks and considerations associated with equity
investing, as well as the risks discussed herein.
To the extent the Fund invests in convertible securities or other fixed
income securities, the performance of the Fund will depend in part on interest
rate changes. As interest rates increase, the value of fixed income securities
held by the Fund tends to decrease. To the extent the Fund invests in fixed
income securities with longer maturities, the volatility of the Fund in response
to changes in interest rates can be expected to be greater than if the Fund had
invested in comparable securities with shorter maturities. In addition, the
market value of convertible securities tends to vary with fluctuations in the
market value of the underlying common or preferred stock.
For a discussing of certain other risks associated with the Fund's
additional investment activities, see "Other Investment Practices" above.
MANAGEMENT
The Fund's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the Fund
pursuant to an Investment Advisory Agreement and has overall responsibility for
investment decisions of the Fund, subject to the oversight of the Board of
Trustees. Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation,
a bank holding company. Chase and its predecessors have over 100 years of money
management experience. For its investment advisory services to the Fund, Chase
is entitled to receive an annual fee computed daily and paid monthly based at an
annual rate equal to 0.40% of the Fund's average daily net assets. Chase is
located at 270 Park Avenue, New York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Fund pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly-owned operating subsidiary of
Chase. CAM makes investment decisions for the Fund on a day-to-day basis. For
these services, CAM is entitled to receive a fee, payable by Chase from its
advisory fee, at an annual rate equal to 0.20% of the Fund's average daily net
assets. CAM was recently formed for the purpose of providing discretionary
investment advisory services to institutional clients and to consolidate Chase's
investment management function. The same individuals who serve as portfolio
managers for Chase also serve as portfolio managers for CAM. CAM is located at
1211 Avenue of the Americas, New York, New York 10036.
Portfolio Manager. Tony Gleason, Vice President of Chase has been
responsible for the day-to-day management of the Fund's portfolio since
September 1995. Mr. Gleason is also responsible for co-managing the Vista
Capital Growth Portfolio. Mr. Gleason joined Chase in 1995 with 10 years of
investment experience.
ABOUT YOUR INVESTMENT
Alternative Sales Arrangements
Class A shares. An investor who purchases Class A shares pays a sales
charge at the time of purchase. As a result, Class A shares are not subject to
any sales charges when they are redeemed. Certain purchases of Class A shares
qualify for reduced sales charges. Class A shares have lower combined 12b-1 and
service fees than Class B shares. See "How to Buy, Sell and Exchange Your
Shares" and "Other Information Concerning the Fund."
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Class B shares. Class B shares are sold without an initial sales charge,
but are subject to a contingent deferred sales charge ("CDSC") if redeemed
within a specified period after purchase. Class B shares also have higher
combined 12b-1 and service fees than Class A shares.
Class B shares automatically convert into Class A shares, based on
relative net asset value, at the beginning of the ninth year after purchase. For
more information about the conversion of Class B shares, see the SAI. This
discussion will include information about how shares acquired through
reinvestment of distributions are treated for conversion purposes. Class B
shares provide an investor the benefit of putting all of the investor's dollars
to work from the time the investment is made. Until conversion, Class B shares
will have a higher expense ratio and pay lower dividends than Class A shares
because of the higher combined 12b-1 and service fees. See "How to Buy, Sell and
Exchange Shares" and "Other Information Concerning the Fund."
Which arrangement is best for you? The decision as to which class of
shares provides a more suitable investment for an investor depends on a number
of factors, including the amount and intended length of the investment.
Investors making investments that qualify for reduced sales charges might
consider class A shares. Investors who prefer not to pay an initial sales charge
might consider Class B shares. In almost all cases, investors planning to
purchase $250,000 or more of the Fund's shares will pay lower aggregate charges
and expenses by purchasing Class A shares.
HOW TO BUY, SELL AND EXCHANGE SHARES
How to Buy Shares
You can open a Fund account with as little as $2,500 ($1,000 for IRAs,
SEP-IRAs and the Systematic Investment Plan) and make additional investments at
any time with as little as $100. You can buy Fund shares three ways--through an
investment representative, through the Fund's distributor by calling the Vista
Service Center, or through the Systematic Investment Plan.
All purchases made by check should be in U.S. dollars and made payable to
the Vista Funds. Third party checks, credit cards and cash will not be accepted.
The Fund reserves the right to reject any purchase order or cease offering
shares for purchase at any time. When purchases are made by check, redemptions
will not be allowed until clearance of the purchase check, which may take 15
calendar days or longer. In addition, the redemption of shares purchased through
ACH will not be allowed until clearance of your payment which may take 7
business days or longer.
Buying shares through the Fund's distributor. Complete and return the
enclosed application and your check in the amount you wish to invest to the
Vista Service Center.
Buying shares through systematic investing. You can make regular
investments of $100 or more per transaction through automatic periodic deduction
from your bank checking or savings account. Shareholders electing to start this
Systematic Investment Plan when opening an account should complete Section 8 of
the account application. Current shareholders may begin such a plan at any time
by sending a signed letter with signature guarantee and a deposit slip or voided
check to the Vista Service Center. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Shares are sold at the public offering price based on the net asset value
next determined after the Vista Service Center receives your order in proper
form. In most cases, in order to receive that day's public offering price, the
Vista Service Center must receive your order before the close of regular trading
on the New York Stock Exchange. If you buy shares through your investment
representative, the representative must receive your order before the close of
regular trading on the New York Stock Exchange to receive that day's public
offering price. Orders for shares are accepted by the Fund after funds are
converted to federal funds. Orders paid by check and received by 2:00 p.m.,
Eastern Time will generally be available for the purchase of shares the
following business day.
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If you are considering redeeming or exchanging shares or transferring
shares to another person shortly after purchase, you should pay for those shares
with a certified check to avoid any delay in redemption, exchange or transfer.
Otherwise the Fund may delay payment until the purchase price of those shares
has been collected or, if you redeem by telephone, until 15 calendar days after
the purchase date. To eliminate the need for safekeeping, the Fund will not
issue certificates for your Class A shares unless you request them. Due to the
conversion feature of Class B shares, certificates for Class B shares will not
be issued and all Class B shares will be held in book entry form.
Class A Shares
The public offering price of Class A shares is the net asset value plus a
sales charge that varies depending on the size of your purchase. The Fund
receives the net asset value. The sales charge is allocated between your
broker-dealer and the Fund's distributor as shown in the following table, except
when the Fund's distributor, in its discretion, allocates the entire amount to
your broker-dealer.
- -------------------------------------------------------------------------------
Sales charge as a
percentage of: Amount of sales charge
Amount of transaction at Offering Net Amount reallowed to dealers as a
offering price($) price invested percentage of offering price
- -------------------------------------------------------------------------------
Under 100,000 4.50 4.71 4.00
- -------------------------------------------------------------------------------
100,000 but under 250,000 3.75 3.90 3.25
- -------------------------------------------------------------------------------
250,000 but under 500,000 2.50 2.56 2.25
- -------------------------------------------------------------------------------
500,000 but under 1,000,000 2.00 2.04 1.75
- -------------------------------------------------------------------------------
There is no initial sales charge on purchases of Class A shares of $1 million
or more.
The Fund's distributor pays broker-dealers commissions on net sales of
Class A shares of $1 million or more based on an investor's cumulative
purchases. Such commissions are paid at the rate of 0.75% of the amount under
$2.5 million, 0.50% of the next $7.5 million, 0.25% of the next $40 million and
0.15% thereafter. The Fund's distributor may withhold such payments with respect
to short-term investments.
Class B Shares
Class B shares are sold without an initial sales charge, although a CDSC
will be imposed if you redeem shares within a specified period after purchase,
as shown in the table below. The following types of shares may be redeemed
without charge at any time: (i) shares acquired by reinvestment of distributions
and (ii) shares otherwise exempt from the CDSC, as described below. For other
shares, the amount of the charge is determined as a percentage of the lesser of
the current market value or the purchase price of shares being redeemed.
Year 1 2 3 4 5 6 7 8+
- --------------------------------------------------------------
CDSC 5% 4% 3% 3% 2% 1% 0% 0%
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In determining whether a CDSC is payable on any redemption, the Fund will
first redeem shares not subject to any charge, and then shares held longest
during the CDSC period. When a share that has appreciated in value is redeemed
during the CDSC period, a CDSC is assessed only on its initial purchase price.
For information on how sales charges are calculated if you exchange your shares,
see "How to Exchange Your Shares." The Fund's distributor pays broker-dealers a
commission of 4.00% of the offering price on sales of Class B shares, and the
distributor receives the entire amount of any CDSC you pay.
General
You may be eligible to buy Class A shares at reduced sales charges.
Consult your investment representative or the Vista Service Center for details
about Vista's combined purchase privilege, cumulative quantity discount,
statement of intention, group sales plan, employee benefit plans, and other
plans. Descriptions are also included in the enclosed application and in the
SAI. In addition, sales charges will not apply to shares purchased with
redemption proceeds received within the prior ninety days from non-Vista mutual
funds on which the investor paid a front-end or contingent deferred sales
charge.
A participant-directed employee benefit plan participating in a
"multi-fund" program approved by the Board of Trustees may include amounts
invested in the other mutual funds participating in such program for purposes of
determining whether the plan may purchase Class A shares at net asset value.
These investments will also be included for purposes of the discount privileges
and programs described above.
The Fund may sell Class A shares at net asset value without an initial
sales charge to the current and retired Trustees (and their immediate families),
current and retired employees (and their immediate families) of Chase, the
Fund's distributor and transfer agent or any affiliates or subsidiaries thereof,
registered representatives and other employees (and their immediate families) of
broker-dealers having selected dealer agreements with the Fund's distributor,
employees (and their immediate families) of financial institutions having
selected dealer agreements with the Fund's distributor (or otherwise having an
arrangement with a broker-dealer or financial institution with respect to sales
of Vista fund shares) financial institution trust departments investing an
aggregate of $1 million or more in the Vista Family of Funds and clients of
certain administrators of tax-qualified plans when proceeds from repayments of
loans to participants are invested (or reinvested) in the Vista Family of Funds.
No initial sales charge will apply to the purchase of Class A shares of
the Fund by an investor seeking to invest the proceeds of a qualified retirement
plan where a portion of the plan was invested in the Vista Family of Funds, any
qualified retirement plan with 50 or more participants, or an individual
participant in a tax-qualified plan making a tax-free rollover or transfer of
assets from the plan in which Chase or an affiliate serves as trustee or
custodian of the plan or manages some portion of the plan's assets.
Purchases of Class A shares of the Fund may be made with no initial sales
charge through an investment adviser or financial planner that charges a fee for
its services. Purchases of Class A shares of the Fund may be made with no
initial sales charge (i) by an investment adviser, broker or financial planner,
provided arrangements are preapproved and purchases are placed through an
omnibus account with the Fund or (ii) by clients of such investment adviser or
financial planner who place trades for their own accounts, if such accounts are
linked to a master account of such investment adviser or financial planner on
the books and records of the broker or agent. Such purchases may be made for
retirement and deferred compensation plans and trusts used to fund those plans.
Purchases of Class A shares of the Fund may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary exercising investment discretion, provided that
appropriate notification of such fiduciary relationship is reported at the time
of the investment to the Fund, the Fund's distributor or the Vista Service
Center.
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Shareholders of record of any Vista fund as of November 30, 1990 and
certain immediate family members may purchase Class A shares of the Fund with no
initial sales charge for as long as they continue to own Class A shares of any
Vista fund, provided there is no change in account registration. Shareholders of
record of any portfolio of The Hanover Funds, Inc. or The Hanover Investment
Funds, Inc. as of May 3, 1996 and certain related investors may purchase Class A
shares of the Fund with no initial sales charge for as long as they continue to
own shares of any Vista fund following this date, provided there is no change in
account registration.
The Fund may sell Class A shares at net asset value without an initial
sales charge in connection with the acquisition by the Fund of assets of an
investment company or personal holding company. The CDSC will be waived on
redemption of Class B shares arising out of death or disability or in connection
with certain withdrawals from IRA or other retirement plans. Up to 12% of the
value of Class B shares subject to a systematic withdrawal plan may also be
redeemed each year without a CDSC, provided that the Class B account had a
minimum balance of $20,000 at the time the systematic withdrawal plan was
established. The SAI contains additional information about purchasing the Fund's
shares at reduced sales charges.
The Fund reserves the right to change any of these policies on purchases
without an initial sales charge at any time and may reject any such purchase
request.
Shareholders of other Vista funds may be entitled to exchange their shares
for, or reinvest distributions from their funds in, shares of the Fund at net
asset value.
How to Sell Shares
You can sell your shares to the Fund any day the New York Stock Exchange
is open, either directly to the Fund or through your investment representative.
The Fund will only forward redemption payments on shares for which it has
collected payment of the purchase price.
Selling shares directly to the Fund. Send a signed letter of instruction
to the Vista Service Center, along with any certificates that represent shares
you want to sell. The price you will receive is the next net asset value
calculated after the Fund receives your request in proper form, less any
applicable CDSC. In order to receive that day's net asset value, the Vista
Service Center must receive your request before the close of regular trading on
the New York Stock Exchange.
If you sell shares having a net asset value of $100,000 or more, the
signatures of registered owners or their legal representatives must be
guaranteed by a bank, broker-dealer or certain other financial institutions. See
the SAI for more information about where to obtain a signature guarantee.
If you want your redemption proceeds sent to an address other than your
address as it appears on Vista's records, a signature guarantee is required. The
Fund may require additional documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Vista Service Center for details.
The Fund generally sends you payment for your shares the business day
after your request is received, assuming the Fund has collected payment of the
purchase price of your shares. Under unusual circumstances, the Fund may suspend
redemptions, or postpone payment for more than seven days, as permitted by
federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.
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<PAGE>
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request, as described above,
or contact your investment representative. The Telephone Redemption Privilege is
not available if you were issued certificates for shares that remain
outstanding. The Telephone Redemption Privilege may be modified or terminated
without notice.
Systematic withdrawal. You can make regular withdrawals of $50 or more
($100 or more for Class B accounts) monthly, quarterly or semiannually. A
minimum account balance of $5,000 is required to establish a systematic
withdrawal plan for Class A accounts. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Selling shares through your investment representative. Your investment
representative must receive your request before the close of regular trading on
the New York Stock Exchange to receive that day's net asset value. Your
investment representative will be responsible for furnishing all necessary
documentation to the Vista Service Center, and may charge you for its services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $500 or if you purchase through the Systematic Investment
Plan and fail to meet the Fund's investment minimum within a twelve month
period. In the event of any such redemption, you will receive at least 60 days
notice prior to the redemption. In the event the Fund redeems Class B shares
pursuant to this provision, no CDSC will be imposed.
How to Exchange Your Shares
You can exchange your shares for shares of the same class of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer all classes of shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully and retained for
future reference. If you exchange shares subject to a CDSC, the transaction will
not be subject to the CDSC. However, when you redeem the shares acquired through
the exchange, the redemption may be subject to the CDSC, depending upon when you
originally purchased the shares. The CDSC will be computed using the schedule of
any fund into or from which you have exchanged your shares that would result in
your paying the highest CDSC applicable to your class of shares. In computing
the CDSC, the length of time you have owned your shares will be measured from
the date of original purchase and will not be affected by any exchange.
An exchange of Class B shares into any of the Vista money market funds
other than the Class B shares of the Vista Prime Money Market Fund will be
treated as a redemption -- and therefore subject to the conditions of the CDSC
- -- and a subsequent purchase. Class B shares of any Vista non-money market fund
may be exchanged into the Class B shares of the Vista Prime Money Market Fund in
order to continue the aging of the initial purchase of such shares.
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
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<PAGE>
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the amount or
number of exchanges or reject any exchange. In addition, any shareholder who
makes more than ten exchanges of shares involving the Fund in a year or three in
a calendar quarter will be charged a $5.00 administration fee for each such
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult the Vista Service Center before requesting an exchange.
See the SAI to find out more about the exchange privilege.
Reinstatement privilege. Class A shareholders have a one time privilege of
reinstating their investment in the Fund at net asset value next determined
subject to written request within 90 calendar days of the redemption,
accompanied by payment for the shares (not in excess of the redemption). Class B
shareholders who have redeemed their shares and paid a CDSC with such redemption
may purchase Class A shares with no initial sales charge (in an amount not in
excess of their redemption proceeds) if the purchase occurs within 90 days of
the redemption of the Class B shares.
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each business day of the Fund, by
dividing the net assets of the Fund attributable to that class by the total
number of outstanding shares of that class. Values of assets held by the Fund
are determined on the basis of their market or other fair value, as described in
the SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund distributes any net investment income at least quarterly and any
net realized capital gains at least annually. Distributions from capital gains
are made after applying any available capital loss carryovers. Distributions
paid by the Fund with respect to Class A shares will generally be greater than
those paid with respect to Class B shares because expenses attributable to Class
B shares will generally be higher.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares without a sales charge; (2) receive
distributions from net investment income in cash or by ACH to a pre-established
bank account while reinvesting capital gains distributions in additional shares
without a sales charge; or (3) receive all distributions in cash or by ACH. You
can change your distribution option by notifying the Vista Service Center in
writing. If you do not select an option when you open your account, all
distributions will be reinvested. All distributions not paid in cash or by ACH
will be reinvested in shares of the class on which the distributions are paid.
You will receive a statement confirming reinvestment of distributions in
additional Fund shares promptly following the quarter in which the reinvestment
occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income
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on a current basis. If the Fund does not qualify as a regulated investment
company for any taxable year or does not make such distributions, the Fund will
be subject to tax on all of its income and gains.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Distribution Plans
The Fund's distributor is Vista Fund Distributors, Inc. ("VFD"). VFD is a
subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase. The Trust
has adopted Rule 12b-1 distribution plans for Class A and Class B shares which
provide that the Fund will pay distribution fees at annual rates of up to 0.25%
and 0.75% of the average daily net assets attributable to Class A and Class B
shares of the Fund, respectively. Payments under the distribution plans shall be
used to compensate or reimburse the Fund's distributor and broker-dealers for
services provided and expenses incurred in connection with the sale of Class A
and Class B shares, and are not tied to the amount of actual expenses incurred.
Payments may be used to compensate broker-dealers with trail or maintenance
commissions at an annual rate of up to 0.25% of the average daily net asset
value of Class A or Class B shares maintained in the Fund by customers of these
broker-dealers. Trail or maintenance commissions are paid to broker-dealers
beginning the 13th month following the purchase of shares by their customers.
Some activities intended to promote the sale of Class A and Class B shares will
be conducted generally by the Vista Family of Funds, and activities intended to
promote the Fund's Class A or Class B shares may also benefit the Fund's other
shares and other Vista funds.
VFD may provide promotional incentives to broker-dealers that meet
specified sales targets for one or more Vista funds. These incentives may
include gifts of up to $100 per person annually; an occasional meal, ticket to a
sporting event or theater or entertainment for broker-dealers and their guests;
and payment or reimbursement for travel expenses, including lodging and meals,
in connection with attendance at training and educational meetings within and
outside the U.S.
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Class A or B shares of the Fund. These services
include assisting with purchase and redemption transactions, maintaining
shareholder accounts and records, furnishing customer statements, transmitting
shareholder reports and communications to customers and other similar
shareholder liaison services. For performing these services, each shareholder
servicing agent receives an annual fee of up to 0.25%
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of the average daily net assets of Class A and B shares of the Fund held by
investors for whom the shareholder servicing agent maintains a servicing
relationship. Shareholder servicing agents may subcontract with other parties
for the provision of shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such
other fees or the fees for their services as shareholder servicing agents.
Administrator and Sub-Administrator
Chase acts as the Fund's administrator and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets.
VFD provides certain sub-administrative services to the Fund pursuant to a
distribution and sub-administration agreement and is entitled to receive a fee
for these services from the Fund at an annual rate equal to 0.05% of the Fund's
average daily net assets. VFD has agreed to use a portion of this fee to pay for
certain expenses incurred in connection with organizing new series of the Trust
and certain other ongoing expenses of the Trust. VFD is located at 101 Park
Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Shareholder servicing and
distribution fees are allocated to specific classes of the Fund. In addition,
the Fund may allocate transfer agency and certain other expenses by class.
Service providers to the Fund may, from time to time, voluntarily waive all or a
portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the
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<PAGE>
earnings, dividends and assets of the particular series or class. Shares have no
preemptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of the Fund generally vote
together except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class.
The Fund issues multiple classes of shares. This Prospectus relates to
Class A and Class B shares of the Fund. The Fund may offer other classes of
shares in addition to these classes. The categories of investors that are
eligible to purchase shares and minimum investment requirements may differ for
each class of Fund shares. In addition, other classes of Fund shares may be
subject to differences in sales charge arrangements, ongoing distribution and
service fee levels, and levels of certain other expenses, which would affect the
relative performance of the different classes. Investors may call 1-800-34-VISTA
to obtain additional information about other classes of shares of the Fund that
are offered. Any person entitled to receive compensation for selling or
servicing shares of the Fund may receive different levels of compensation with
respect to one class of shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or
-18-
<PAGE>
use material inside information in the possession of any other division or
department of Chase, including the division that performs services for the Fund
as custodian, or in the possession of any affiliate of Chase. Shareholders of
the Fund should be aware that, subject to applicable legal or regulatory
restrictions, Chase and its affiliates may exchange among themselves certain
information about the shareholder and his account. Transactions with affiliated
broker-dealers will only be executed on an agency basis in accordance with
applicable federal regulations.
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income calculated pursuant to federal rules per share
during a recent 30-day period by the maximum public offering price per share of
such class on the last day of that period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the maximum public offering price (in the case of Class A shares) or
reflecting the deduction of any applicable contingent deferred sales charge (in
the case of Class B shares). Total return may also be presented for other
periods or without reflecting sales charges. Any quotation of investment
performance not reflecting the maximum initial sales charge or contingent
deferred sales charge would be reduced if such sales charges were used.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other mutual
funds and other investment vehicles. Quotation of investment performance for any
period when a fee waiver or expense limitation was in effect will be greater
than if the waiver or limitation had not been in effect. The Fund's performance
may be compared to other mutual funds, relevant indices and rankings prepared by
independent services. See the SAI.
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<PAGE>
MAKE THE MOST OF YOUR VISTA PRIVILEGES
The following services are available to you as a Vista mutual fund shareholder.
o SYSTEMATIC INVESTMENT PLAN -- Invest as much as you wish ($100 or more) in
the first or third week of any month. The amount will be automatically
transferred from your checking or savings account.
o SYSTEMATIC WITHDRAWAL -- Make regular withdrawals of $50 or more ($100 or
more for Class B accounts) monthly, quarterly or semiannually. A minimum
account balance of $5,000 is required to establish a systematic withdrawal
plan for Class A accounts.
o SYSTEMATIC EXCHANGE -- Transfer assets automatically from one Vista
account to another on a regular, prearranged basis. There is no additional
charge for this service.
o FREE EXCHANGE PRIVILEGE -- Exchange money between Vista funds in the same
class of shares without charge. The exchange privilege allows you to
adjust your investments as your objectives change.
Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange and systematic withdrawal or exchange.
o REINSTATEMENT PRIVILEGE -- Class A shareholders have a one time privilege
of reinstating their investment in the Fund at net asset value next
determined subject to written request within 90 calendar days of the
redemption, accompanied by payment for the shares (not in excess of the
redemption).
Class B shareholders who have redeemed their shares and paid a CDSC with
such redemption may purchase Class A shares with no initial sales charge
(in an amount not in excess of their redemption proceeds) if the purchase
occurs within 90 days of the redemption of the Class B shares.
For more information about any of these services and privileges, call your
shareholder servicing agent, investment representative or the Vista Service
Center at 1-800-34-VISTA. These privileges are subject to change or termination.
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<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
-21-
<PAGE>
PROSPECTUS
VISTA[SM] GROWTH AND INCOME FUND
Class A and B Shares
May 6, 1996
Investment Strategy: Growth and Income
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-34-VISTA. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
The Fund, unlike many other investment companies which directly acquire
and manage their own portfolios of securities, seeks its investment objective by
investing all of its investable assets in Growth and Income Portfolio (the
"Portfolio"), an open-end management investment company with investment
objectives identical to those of the Fund. Investors should carefully consider
this investment approach. For additional information regarding this investment
structure, see "Unique Characteristics of Master/Feeder Fund Investment
Structure" on page 19.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary .....................................................
The expenses you might pay on your Fund investment, including examples
Financial Highlights ................................................
How the Fund has performed
Fund Objective.......................................................
Investment Policies .................................................
The kinds of securities in which the Fund invests,
investment policies and techniques, and risks
Management ..........................................................
Chase Manhattan Bank, the Fund's adviser; Chase Asset Management,
the Fund's sub-adviser, and the individuals who manage the Fund
About Your Investment ...............................................
Alternative sales arrangements
How to Buy, Sell and Exchange Shares.................................
How the Fund Values its Shares.......................................
How Distributions are Made; Tax Information .........................
How the Fund distributes its earnings, and
tax treatment related to those earnings
Other Information Concerning the Fund ...............................
Distribution plans, shareholder servicing agents, administration,
custodian, expenses, organization and regulatory matters
Performance Information .............................................
How performance is determined, stated and/or advertised
Make the Most of Your Vista Privileges...............................
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<PAGE>
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the Fund based on
expenses incurred in the most recent fiscal year. The examples show the
cumulative expenses attributable to a hypothetical $1,000 investment over
specified periods.
Class A Class B
Shareholder Transaction Expenses Shares Shares
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)................ 4.75% None
Maximum Deferred Sales Charge
(as a percentage of the lower of original
purchase price or redemption proceeds)(*).......... None 5.00%
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee............................ 0.40% 0.40%
12b-1 Fee(**)...................................... 0.25% 0.75%
Shareholder Servicing Fee.......................... 0.25% 0.25%
Other Expenses..................................... 0.40% 0.40%
----- -----
Total Fund Operating Expenses...................... 1.30% 1.80%
===== =====
Examples
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares(+)................ $60 $87 $115 $197
Class B Shares:
Assuming complete
redemption at the
end of the
period(++)(+++)................ $70 $90 $121 $198
Assuming no
redemptions (+++).............. $18 $57 $97 $198
- -----------------------
-3-
<PAGE>
* The maximum deferred sales charge on Class B shares applies to redemptions
during the first year after purchase; the charge generally declines by 1%
annually thereafter (except in the fourth year), reaching zero after six
years. See "How to Buy, Sell and Exchange Shares."
** Long-term shareholders in mutual funds with 12b-1 fees, such as Class A and
Class B shareholders of the Fund, may pay more than the economic equivalent
of the maximum front-end sales charge permitted by rules of the National
Association of Securities Dealers, Inc.
+ Assumes deduction at the time of purchase of the maximum sales charge.
++ Assumes deduction at the time of redemption of the maximum applicable
deferred sales charge.
+++ Ten-year figures assume conversion of Class B shares to Class A shares at
the beginning of the ninth year after purchase. See "How to Buy, Sell and
Exchange Shares."
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
-4-
<PAGE>
FINANCIAL HIGHLIGHTS
The table set forth below provides selected per share data and ratios for
both Class A and Class B shares outstanding throughout each of the periods
shown. This information is supplemented by financial statements and accompanying
notes appearing in the Fund's Annual Report to Shareholders for the fiscal year
ended October 31, 1995, which is incorporated by reference into the SAI.
Shareholders can obtain a copy of this annual report by contacting the Fund or
their Shareholder Servicing Agent. The financial statements and notes, as well
as the financial information set forth in the table below for each of the five
years in the period ended October 31, 1995, has been audited by Price Waterhouse
LLP, independent accountants, whose report thereon is also included in the
Annual Report to shareholders.
<TABLE>
<CAPTION>
VISTA GROWTH AND INCOME FUND
Class A
--------------------------------------------------------------------------------------------------
Year ended October 31 9/8/87*
PER SHARE OPERATING ---------------------------------------------------------------------------------------- through
PERFORMANCE 1995 1994 1993 1992 1991 1990 1989 1988 10/31/87
- ------------------- ------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $30.26 $30.99 $26.60 $25.49 $16.49 $18.12 $14.08 $10.00 $10.00
Income from Investment ------ ------ ------ ------ ------ ------ ------ ------ ------
Operations:
Net Investment Income 0.614 0.466 0.341 0.313 0.388 0.707 0.633 0.225 0.000
Net Gains or (Losses) in
Securities (both
realized and unrealized) 4.710 (0.429) 5.007 2.702 9.521 (0.573) 5.033 4.050 0.000
----- ------ ----- ----- ----- ------ ----- ----- -----
Total from Investment
Operations 5.324 0.037 5.348 3.015 9.909 0.134 5.666 4.275 0.000
----- ------ ----- ----- ----- ------ ----- ----- -----
Less Distributions:
Dividends from Net
Investment Income 0.621 0.422 0.338 0.313 0.339 0.698 0.611 0.195 0.000
Distributions from
Capital Gains -- 0.345 0.620 1.587 0.574 1.063 1.015 0.000 0.000
----- ----- ----- ----- ----- ----- ----- ----- -----
Total Distributions 0.621 0.767 0.958 1.900 0.913 1.761 1.626 0.195 0.000
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of
Period $34.96 $30.26 $30.99 $26.60 $25.49 $16.49 $18.12 $14.08 $10.00
====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return(1) 17.79% 0.15% 20.47% 12.34% 62.60% 0.05% 44.40% 42.87% 0.00%
Ratios/Supplemental Data#:
Net Assets, End of Period
(000 omitted) $1,521,489 $1,413,899 $949,465 $149,506 $43,261 $17,994 $8,097 $1,197 $13
Ratio of Expenses to
Average Net Assets 1.43% 1.40% 1.39% 1.43% 1.25% 1.09% 0.00% 0.00% 0.00%#
Ratio of Net Investment
Income to Average Net
Assets 1.93% 1.60% 1.07% 1.19% 1.24% 3.65% 4.56% 2.64% 0.00%#
Ratio of Expenses without
waivers and assumption of
expenses to Average Net
Assets 1.45% 1.40% 1.39% 1.46% 1.76% 2.06% 2.50% 2.00% 2.00%#
Ratio of Net Investment
Income without waivers and
assumption of expenses to
Average Net Assets 1.91% 1.60% 1.07% 1.16% 0.73% 2.68% 2.06% 0.64% (2.00%)#
Portfolio Turnover Rate -- -- 41% 56% 103% 160% 319% 109% 0%
</TABLE>
- ---------------
* Commencement of operations.
(1) Total return figures are calculated before taking into account sales load of
4.75% for Class A shares ,or any contingent deferred sale charges on Class B
shares.
# Annualized.
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<PAGE>
<TABLE>
<CAPTION>
VISTA GROWTH AND INCOME FUND
Class B
----------------------
Year 11/4/93**
Ended to
10/31/95 10/31/94
------- -------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -------------------------------
Net Asset Value, Beginning
of Period............................................. $30.12 $30.39
------ -----
Income from Investment
Operations:
Net Investment Income.............................. 0.463 0.336
Net Gains or (Losses) in
Securities (both realized and unrealized)......... 4.700 0.109
------ -----
Total from Investment Operations................... 5.163 0.445
------ -----
Less Distributions:
Dividends from Net
Investment Income................................. 0.470 0.370
Distributions from Capital Gains................... -- 0.345
------ -----
Total Distributions................................ 0.470 0.715
------ -----
Net Asset Value, End of
Period................................................ $34.81 $30.12
====== =====
Total Return (1)...................................... 17.21% 1.55%
Ratios/Supplemental Data:
Net Assets, End of Period
(000 omitted)...................................... $273,685 $160,375
Ratio of Expenses to
Average Net Assets................................. 1.93% 1.89%#
Ratio of Net Investment
Income to Average Net
Assets............................................. 1.38% 1.21%#
Ratio of Expenses without
waivers and assumption of
expenses to Average Net
Assets............................................. 1.94% 1.89%#
Ratio of Net Investment
Income without waivers and
assumption of expenses to
Average Net Assets.................................. 1.36% 1.21%#
Portfolio Turnover Rate............................... -- --
- ---------------------------------
</TABLE>
** Commencement of offering of shares.
(1) Total return figures are calculated before taking into account sales load of
4.75% for Class A shares ,or any contingent deferred sale charges on Class B
shares.
# Annualized.
-6-
<PAGE>
FUND OBJECTIVES
Vista Growth and Income Fund seeks to provide long-term capital
appreciation and dividend income. The Fund is not intended to be a complete
investment program, and there is no assurance it will achieve its objectives.
INVESTMENT POLICIES
Investment Approach
The Fund seeks to achieve its objective by investing all of its investable
assets in the Portfolio. The Portfolio invests in common stocks of issuers with
a broad range of market capitalizations. Under normal market conditions, the
Portfolio will invest at least 80% of its total assets in common stocks. In
addition, the Portfolio may invest up to 20% of its total assets in convertible
securities.
The Portfolio's advisers intend to utilize both quantitative and
fundamental research to identify undervalued stocks with a catalyst for positive
change. The advisers believe that the market risk involved in seeking capital
appreciation will be moderated to an extent by the anticipated dividend returns
on the stocks in which the Portfolio invests.
The Portfolio is classified as a "non-diversified" fund under federal
securities law. The Portfolio's assets may be more concentrated in the
securities of any single issuer or group of issuers than if the Portfolio were
diversified.
The Portfolio may invest any portion of its assets not invested as
described above in high quality money market instruments and repurchase
agreements. For temporary defensive purposes, the Portfolio may invest without
limitation in these instruments as well as investment grade debt securities. To
the extent that the Portfolio departs from its investment policies during
temporary defensive periods, the Fund's investment objective may not be
achieved.
Fund Structure
The Portfolio has an objective identical to that of the Fund. The Fund may
withdraw its investment from the Portfolio at any time if the Trustees determine
that it is in the best interest of the Fund to do so. Upon any such withdrawal,
the Trustees would consider what action might be taken, including investing all
of the Fund's investable assets in another pooled investment entity having
substantially the same objective and policies as the Fund or retaining an
investment adviser to manage the Fund's assets directly.
Other Investment Practices
The Portfolio may also engage in the following investment practices, when
consistent with the Portfolio's overall objective and policies. These practices,
and certain associated risks, are more fully described in the SAI.
Foreign Securities. The Portfolio may invest up to 20% of its total assets
in foreign securities, including Depositary Receipts. Since foreign securities
are normally denominated and traded in foreign currencies, the values of the
Portfolio's foreign investments may be affected favorably or unfavorably by
currency exchange rates and exchange control regulations. There may be less
information publicly available about foreign companies than U.S. companies, and
they are not generally subject to accounting, auditing and financial reporting
standards and practices comparable to those in the U.S. The securities of
foreign companies may be less liquid and more volatile than the securities of
comparable U.S. companies. Foreign settlement procedures and trade regulations
may involve certain risks (such as delay in payment or delivery of securities or
in the recovery of the Portfolio's assets held abroad) and expenses. It is
possible that nationalization or expropriation of assets, imposition of currency
exchange controls, confiscatory taxation, political or financial instability and
diplomatic developments could affect the value of the
-7-
<PAGE>
Portfolio's investments in certain foreign countries. Foreign laws may restrict
the ability to invest in certain countries or issuers and special tax
considerations will apply to foreign securities. The risks can increase if the
Portfolio invests in securities of issuers in emerging markets.
The Portfolio may invest its assets in securities of foreign issuers in
the form of American Depositary Receipts, European Depositary Receipts, Global
Depositary Receipts or other similar securities representing securities of
foreign issuers (collectively, "Depositary Receipts"). The Portfolio treats
Depositary Receipts as interests in the underlying securities for purposes of
its investment policies. The Portfolio will limit its investment in Depositary
Receipts not sponsored by the issuer of the underlying securities to no more
than 5% of the value of its net assets (at the time of investment).
Supranational and ECU Obligations. The Portfolio may invest in securities
issued by supranational organizations, which include organizations such as The
World Bank, the European Community, the European Coal and Steel Community and
the Asian Development Bank. The Portfolio may also invest in securities
denominated in the ECU, which is a "basket" consisting of specified amounts of
the currencies of certain member states of the European Community. These
securities are typically issued by European governments and supranational
organizations.
Convertible Securities. The Portfolio may invest up to 20% of its net
assets in convertible securities, which are securities generally offering fixed
interest or dividend yields which may be converted either at a stated price or
stated rate for common or preferred stock. Although to a lesser extent than with
fixed-income securities generally, the market value of convertible securities
tends to decline as interest rates increase, and increase as interest rates
decline. Because of the conversion feature, the market value of convertible
securities also tends to vary with fluctuations in the market value of the
underlying common or preferred stock.
Money Market Instruments. The Portfolio may invest in cash or
high-quality, short-term money market instruments. Such instruments may include
U.S. Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Investment Grade Debt Securities. Investment grade debt securities are
securities rated in the category BBB or higher by Standard & Poor's Corporation
("S&P"), or Baa or higher by Moody's Investors Services, Inc. ("Moody's") or the
equivalent by another national rating organization, or, if unrated, determined
by the advisers to be of comparable quality.
Repurchase Agreements, Securities Loans and Forward Commitments. The
Portfolio may enter into agreements to purchase and resell securities at an
agreed-upon price and time. The Portfolio also has the ability to lend portfolio
securities in an amount equal to not more than 30% of its total assets to
generate additional income. These transactions must be fully collateralized at
all times. The Portfolio may purchase securities for delivery at a future date,
which may increase its overall investment exposure and involves a risk of loss
if the value of the securities declines prior to the settlement date. These
transactions involve some risk to the Portfolio if the other party should
default on its obligation and the Portfolio is delayed or prevented from
recovering the collateral or completing the transaction.
Borrowings and Reverse Repurchase Agreements. The Portfolio may borrow
money from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Portfolio may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Portfolio enters into a reverse repurchase agreement,
it will establish a segregated account in which it will maintain liquid assets
on a daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Portfolio would be required
-8-
<PAGE>
to pay interest on amounts obtained through reverse repurchase agreements, which
are considered borrowings under federal securities laws.
Stand-By Commitments. The Portfolio may enter into put transactions,
including transactions sometimes referred to as stand-by commitments, with
respect to securities in its portfolio. In these transactions, the Portfolio
would acquire the right to sell a security at an agreed upon price within a
specified period prior to its maturity date. These transactions involve some
risk to the Portfolio if the other party should default on its obligation and
the Portfolio is delayed or prevented from recovering the collateral or
completing the transaction. Acquisition of puts will have the effect of
increasing the cost of the securities subject to the put and thereby reducing
the yields otherwise available from such securities.
Other Investment Companies. The Portfolio may invest up to 10% of its
total assets in shares of other investment companies, subject to applicable
regulatory limitations.
STRIPS. The Portfolio may invest up to 20% of its total assets in
separately traded principal and interest components of securities backed by the
full faith and credit of the U.S. Government, including instruments known as
"STRIPS". The value of these instruments tends to fluctuate more in response to
changes in interest rates than the value of ordinary interest-paying debt
securities with similar maturities. The risk is greater when the period to
maturity is longer.
Derivatives and Related Instruments. The Portfolio may invest its assets
in derivative and related instruments to hedge various market risks or to
increase the Portfolio's income or gain. Some of these instruments will be
subject to asset segregation requirements to cover the Portfolio's obligations.
The Portfolio may (i) purchase, write and exercise call and put options on
securities and securities indexes (including using options in combination with
securities, other options or derivative instruments); (ii) enter into swaps,
futures contracts and options on futures contracts; (iii) employ forward
currency contracts; and (iv) purchase and sell structured products, which are
instruments designed to restructure or reflect the characteristics of certain
other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Portfolio invests may be particularly sensitive to changes in prevailing
economic conditions and market value. The ability of the Portfolio to
successfully utilize these instruments may depend in part upon the ability of
the Portfolio's advisers to forecast these factors correctly. Inaccurate
forecasts could expose the Portfolio to a risk of loss. There can be no
guarantee that there will be a correlation between price movements in a hedging
instrument and in the portfolio assets being hedged. The Portfolio is not
required to use any hedging strategies. Hedging strategies, while reducing risk
of loss, can also reduce the opportunity for gain. Derivatives transactions not
involving hedging may have speculative characteristics, involve leverage and
result in more risk to the Portfolio than hedging strategies using the same
instruments. There can be no assurance that a liquid market will exist at a time
when the Portfolio seeks to close out a derivatives position. Activities of
large traders in the futures and securities markets involving arbitrage,
"program trading," and other investment strategies may cause price distortions
in derivatives markets. In certain instances, particularly those involving
over-the-counter transactions or forward contracts, there is a greater potential
that a counterparty or broker may default. In the event of a default, the
Portfolio may experience a loss. For additional information concerning
derivatives, related instruments and the associated risks, see the SAI.
Portfolio Turnover. The frequency of the Portfolio's portfolio
transactions will vary from year to year. The Portfolio's investment policies
may lead to frequent changes in investments, particularly in periods of rapidly
changing market conditions. High portfolio turnover rates would generally result
in higher transaction costs, including brokerage commissions or dealer mark-ups,
and would make it more difficult for the Portfolio to qualify as a registered
investment company under federal tax law. See "How Distributions are Made; Tax
Information" and "Other Information Concerning the Fund -- Certain Regulatory
Matters."
Limiting Investment Risks
Specific investment restrictions help the Portfolio limit investment risks
for the Fund's shareholders. These restrictions prohibit the Portfolio from: (a)
with respect to 50% of its total assets, holding more than 10% of the voting
securities of any issuer; (b) investing more than 15% of its net assets in
illiquid securities (which include securities restricted as to resale unless
they are determined to be readily marketable in accordance with procedures
established by the Board of Trustees); or (c) investing more than 25% of its
total assets in any one industry. A complete description of these and other
investment policies is included in the SAI. Except for restriction (c) above and
investment policies designated as fundamental in the SAI, the investment
policies (including their investment objective) of the Portfolio and the Fund
are not fundamental. Shareholder approval is not required to change any
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non-fundamental investment policy. However, in the event of a change in the
Fund's or Portfolio's investment objective, shareholders will be given at least
30 days prior written notice.
Risk Factors
The net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities held by the Portfolio. The Fund does not
constitute a balanced or complete investment program. The Fund is subject to the
general risks and considerations associated with equity investing.
Because the Portfolio is "non-diversified," the value of the Fund's shares
is more susceptible to developments affecting issuers in which the Portfolio
invests.
For a discussion of certain other risks associated with the Portfolio's
additional investment activities, see "Other Investment Practices" above.
MANAGEMENT
The Portfolio's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the
Portfolio pursuant to an Investment Advisory Agreement and has overall
responsibility for investment decisions of the Portfolio, subject to the
oversight of the Board of Trustees. Chase is a wholly-owned subsidiary of The
Chase Manhattan Corporation, a bank holding company. Chase and its predecessors
have over 100 years of money management experience. For its investment advisory
services to the Portfolio, Chase is entitled to receive an annual fee computed
daily and paid monthly based at an annual rate equal to 0.40% of the Portfolio's
average daily net assets. Chase is located at 270 Park Avenue, New York, New
York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Portfolio pursuant to a Sub-Investment
Advisory Agreement between CAM and Chase. CAM is a wholly-owned operating
subsidiary of Chase. CAM makes investment decisions for the Portfolio on a
day-to-day basis. For these services, CAM is entitled to receive a fee, payable
by Chase from its advisory fee, at an annual rate equal to 0.20% of the
Portfolio's average daily net assets. CAM was recently formed for the purpose of
providing discretionary investment advisory services to institutional clients
and to consolidate Chase's investment management function. The same individuals
who serve as portfolio managers for Chase also serve as portfolio managers for
CAM. CAM is located at 1211 Avenue of the Americas, New York, New York 10036.
Portfolio Managers. Dave Klassen, Director of Domestic Equity Portfolio
Management at Chase, and Greg Adams, Director of U.S. Equity Research at Chase,
have been primarily responsible for the day-to-day management of the Portfolio
since March 1995. Mr. Klassen joined Chase in March 1992 and, in addition to
co-managing the Vista Growth and Income Portfolio, is responsible for
co-managing the Vista Small Cap Equity Fund and the Vista Capital Growth Fund.
Prior to joining Chase, Mr. Klassen was a vice president and portfolio manager
at Dean Witter Reynolds, responsible for managing several mutual funds and other
accounts. Mr. Adams joined Chase in 1987 and is also responsible for co-managing
the Vista Balanced Fund. In addition, Mr. Adams has been responsible for
overseeing the proprietary computer model program used in the U.S. equity
selection process.
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ABOUT YOUR INVESTMENT
Alternative Sales Arrangements
Class A shares. An investor who purchases Class A shares pays a sales
charge at the time of purchase. As a result, Class A shares are not subject to
any sales charges when they are redeemed. Certain purchases of Class A shares
qualify for reduced sales charges. Class A shares have lower combined 12b-1 and
service fees than Class B shares. See "How to Buy, Sell and Exchange Shares" and
"Other Information Concerning the Fund."
Class B shares. Class B shares are sold without an initial sales charge,
but are subject to a contingent deferred sales charge ("CDSC") if redeemed
within a specified period after purchase. Class B shares also have higher
combined 12b-1 and service fees than Class A shares.
Class B shares automatically convert into Class A shares, based on relative
net asset value, at the beginning of the ninth year after purchase. For more
information about the conversion of Class B shares, see the SAI. This discussion
will include information about how shares acquired through reinvestment of
distributions are treated for conversion purposes. Class B shares provide an
investor the benefit of putting all of the investor's dollars to work from the
time the investment is made. Until conversion, Class B shares will have a higher
expense ratio and pay lower dividends than Class A shares because of the higher
combined 12b-1 and service fees. See "How to Buy, Sell and Exchange Shares" and
"Other Information Concerning the Fund."
Which arrangement is best for you? The decision as to which class of
shares provides a more suitable investment for an investor depends on a number
of factors, including the amount and intended length of the investment.
Investors making investments that qualify for reduced sales charges might
consider Class A shares. Investors who prefer not to pay an initial sales charge
might consider Class B shares. In almost all cases, investors planning to
purchase $250,000 or more of the Fund's shares will pay lower aggregate charges
and expenses by purchasing Class A shares.
HOW TO BUY, SELL AND EXCHANGE SHARES
How to Buy Shares
You can open a Fund account with as little as $2,500 ($1,000 for IRAs,
SEP-IRAs and the Systematic Investment Plan) and make additional investments at
any time with as little as $100. You can buy Fund shares three ways--through an
investment representative, through the Fund's distributor by calling the Vista
Service Center, or through the Systematic Investment Plan.
All purchases made by check should be in U.S. dollars and made payable to
the Vista Funds. Third party checks, credit cards and cash will not be accepted.
The Fund reserves the right to reject any purchase order or cease offering
shares for purchase at any time. When purchases are made by check, redemptions
will not be allowed until clearance of the purchase check, which may take 15
calendar days or longer. In addition, the redemption of shares purchased through
ACH will not be allowed until clearance of your payment which may take 7
business days or longer.
Buying shares through the Fund's distributor. Complete and return the
enclosed application and your check in the amount you wish to invest to the
Vista Service Center.
Buying shares through systematic investing. You can make regular
investments of $100 or more per transaction through automatic periodic deduction
from your bank checking or savings account. Shareholders electing to start this
Systematic Investment Plan when opening an account should complete Section 8 of
the account application. Current shareholders may begin such a plan at any time
by sending a signed letter with signature guarantee and a deposit slip or voided
check to the Vista Service Center. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
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Shares are sold at the public offering price based on the net asset value
next determined after the Vista Service Center receives your order in proper
form. In most cases, in order to receive that day's public offering price, the
Vista Service Center must receive your order before the close of regular trading
on the New York Stock Exchange. If you buy shares through your investment
representative, the representative must receive your order before the close of
regular trading on the New York Stock Exchange to receive that day's public
offering price. Orders for shares are accepted by the Fund after funds are
converted to federal funds. Orders paid by check and received by 2:00 p.m.,
Eastern Time will generally be available for the purchase of shares the
following business day.
If you are considering redeeming or exchanging shares or transferring
shares to another person shortly after purchase, you should pay for those shares
with a certified check to avoid any delay in redemption, exchange or transfer.
Otherwise the Fund may delay payment until the purchase price of those shares
has been collected or, if you redeem by telephone, until 15 calendar days after
the purchase date. To eliminate the need for safekeeping, the Fund will not
issue certificates for your Class A shares unless you request them. Due to the
conversion feature of Class B shares, certificates for Class B shares will not
be issued and all Class B shares will be held in book entry form.
Class A Shares
The public offering price of Class A shares is the net asset value plus a
sales charge that varies depending on the size of your purchase. The Fund
receives the net asset value. The sales charge is allocated between your
broker-dealer and the Fund's distributor as shown in the following table, except
when the Fund's distributor, in its discretion, allocates the entire amount to
your broker-dealer.
- -------------------------------------------------------------------------------
Sales charge as a
percentage of: Amount of sales charge
Amount of transaction at Offering Net amount reallowed to dealers as a
offering price($) Price invested percentage of offering price
- -------------------------------------------------------------------------------
Under 100,000 4.75 4.99 4.00
- -------------------------------------------------------------------------------
100,000 but under 250,000 3.75 3.90 3.25
- -------------------------------------------------------------------------------
250,000 but under 500,000 2.50 2.56 2.25
- -------------------------------------------------------------------------------
500,000 but under 1,000,000 2.00 2.04 1.75
- -------------------------------------------------------------------------------
There is no initial sales charge on purchases of Class A shares of $1
million or more.
The Fund's distributor pays broker-dealers commissions on net sales of
Class A shares of $1 million or more based on an investor's cumulative
purchases. Such commissions are paid at the rate of 1.00% of the amount under
$2.5 million, 0.75% of the next $7.5 million, 0.50% of the next $40 million and
0.20% thereafter. The Fund's distributor may withhold such payments with respect
to short-term investments.
Class B Shares
Class B shares are sold without an initial sales charge, although a CDSC
will be imposed if you redeem shares within a specified period after purchase,
as shown in the table below. The following types of shares may be redeemed
without charge at any time: (i) shares acquired by reinvestment of distributions
and (ii) shares otherwise exempt from the CDSC, as described below. For other
shares, the amount of the charge is determined as a percentage of the lesser of
the current market value or the purchase price of shares being redeemed.
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Year 1 2 3 4 5 6 7 8+
- --------------------------------------------------------------
CDSC 5% 4% 3% 3% 2% 1% 0% 0%
In determining whether a CDSC is payable on any redemption, the Fund will
first redeem shares not subject to any charge, and then shares held longest
during the CDSC period. When a share that has appreciated in value is redeemed
during the CDSC period, a CDSC is assessed only on its initial purchase price.
For information on how sales charges are calculated if you exchange your shares,
see "How to Exchange Your Shares." The Fund's distributor pays broker-dealers a
commission of 4.00% of the offering price on sales of Class B Shares, and the
distributor receives the entire amount of any CDSC you pay.
General
You may be eligible to buy Class A shares at reduced sales charges.
Consult your investment representative or the Vista Service Center for details
about Vista's combined purchase privilege, cumulative quantity discount,
statement of intention, group sales plan, employee benefit plans, and other
plans. Descriptions are also included in the enclosed application and in the
SAI. In addition, sales charges will not apply to shares purchased with
redemption proceeds received within the prior ninety days from non-Vista mutual
funds on which the investor paid a front-end or contingent deferred sales
charge.
A participant-directed employee benefit plan participating in a
"multi-fund" program approved by the Board of Trustees may include amounts
invested in the other mutual funds participating in such program for purposes of
determining whether the plan may purchase Class A shares at net asset value.
These investments will also be included for purposes of the discount privileges
and programs described above.
The Fund may sell Class A shares at net asset value without an initial
sales charge to the current and retired Trustees (and their immediate families),
current and retired employees (and their immediate families) of Chase, the
Fund's distributor and transfer agent or any affiliates or subsidiaries thereof,
registered representatives and other employees (and their immediate families) of
broker-dealers having selected dealer agreements with the Fund's distributor,
employees (and their immediate families) of financial institutions having
selected dealer agreements with the Fund's distributor (or otherwise having an
arrangement with a broker-dealer or financial institution with respect to sales
of Vista fund shares) financial institution trust departments investing an
aggregate of $1 million or more in the Vista Family of Funds and clients of
certain administrators of tax-qualified plans when proceeds from repayments of
loans to participants are invested (or reinvested) in the Vista Family of Funds.
No initial sales charge will apply to the purchase of Class A shares of
the Fund by an investor seeking to invest the proceeds of a qualified retirement
plan where a portion of the plan was invested in the Vista Family of Funds, any
qualified retirement plan with 50 or more participants, or an individual
participant in a tax-qualified plan making a tax-free rollover or transfer of
assets from the plan in which Chase or an affiliate serves as trustee or
custodian of the plan or manages some portion of the plan's assets.
Purchases of Class A shares of the Fund may be made with no initial sales
charge through an investment adviser or financial planner that charges a fee for
its services. Purchases of Class A shares of the Fund may be made with no
initial sales charge (i) by an investment adviser, broker or financial planner,
provided arrangements are preapproved and purchases are placed through an
omnibus account with the Fund or (ii) by clients of such investment adviser or
financial planner who place trades for their own accounts, if such accounts are
linked to a master account of such investment adviser or financial planner on
the books and records of the broker or agent. Such purchases may be made for
retirement and deferred compensation plans and trusts used to fund those plans.
Purchases of Class A shares of the Fund may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary exercising investment discretion, provided that
appropriate notification of such fiduciary relationship is reported at the time
of the investment to the Fund, the Fund's distributor or the Vista Service
Center.
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Shareholders of record of any Vista fund as of November 30, 1990 and
certain immediate family members may purchase Class A shares of the Fund with no
initial sales charge for as long as they continue to own Class A shares of any
Vista fund, provided there is no change in account registration. Shareholders of
record of any portfolio of The Hanover Funds, Inc. or The Hanover Investment
Funds, Inc. as of May 3, 1996 and certain related investors may purchase Class A
shares of the Fund with no initial sales charge for as long as they continue to
own shares of any Vista fund following this date, provided there is no change in
account registration.
The Fund may sell Class A shares at net asset value without an initial
sales charge in connection with the acquisition by the Fund of assets of an
investment company or personal holding company. The CDSC will be waived on
redemption of Class B shares arising out of death or disability or in connection
with certain withdrawals from IRA or other retirement plans. Up to 12% of the
value of Class B shares subject to a systematic withdrawal plan may also be
redeemed each year without a CDSC, provided that the Class B account had a
minimum balance of $20,000 at the time the systematic withdrawal plan was
established. The SAI contains additional information about purchasing the Fund's
shares at reduced sales charges.
The Fund reserves the right to change any of these policies on purchases
without an initial sales charge at any time and may reject any such purchase
request.
Shareholders of other Vista funds may be entitled to exchange their shares
for, or reinvest distributions from their funds in, shares of the Fund at net
asset value.
How to Sell Shares
You can sell your shares to the Fund any day the New York Stock Exchange
is open, either directly to the Fund or through your investment representative.
The Fund will only forward redemption payments on shares for which it has
collected payment of the purchase price.
Selling shares directly to the Fund. Send a signed letter of instruction
to the Vista Service Center, along with any certificates that represent shares
you want to sell. The price you will receive is the next net asset value
calculated after the Fund receives your request in proper form, less any
applicable CDSC. In order to receive that day's net asset value, the Vista
Service Center must receive your request before the close of regular trading on
the New York Stock Exchange.
If you sell shares having a net asset value of $100,000 or more, the
signatures of registered owners or their legal representatives must be
guaranteed by a bank, broker-dealer or certain other financial institutions. See
the SAI for more information about where to obtain a signature guarantee.
If you want your redemption proceeds sent to an address other than your
address as it appears on Vista's records, a signature guarantee is required. The
Fund may require additional documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Vista Service Center for details.
The Fund generally sends you payment for your shares the business day
after your request is received, assuming the Fund has collected payment of the
purchase price of your shares. Under unusual circumstances, the Fund may suspend
redemptions, or postpone payment for more than seven days, as permitted by
federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.
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<PAGE>
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request, as described above,
or contact your investment representative. The Telephone Redemption Privilege is
not available if you were issued certificates for shares that remain
outstanding. The Telephone Redemption Privilege may be modified or terminated
without notice.
Systematic withdrawal. You can make regular withdrawals of $50 or more
($100 or more for Class B accounts) monthly, quarterly or semiannually. A
minimum account balance of $5,000 is required to establish a systematic
withdrawal plan for Class A accounts. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Selling shares through your investment representative. Your investment
representative must receive your request before the close of regular trading on
the New York Stock Exchange to receive that day's net asset value. Your
investment representative will be responsible for furnishing all necessary
documentation to the Vista Service Center, and may charge you for its services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $500 or if you purchase through the Systematic Investment
Plan and fail to meet the Fund's investment minimum within a twelve month
period. In the event of any such redemption, you will receive at least 60 days
notice prior to the redemption. In the event the Fund redeems Class B shares
pursuant to this provision, no CDSC will be imposed.
How to Exchange Your Shares
You can exchange your shares for shares of the same class of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer all classes of shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully and retained for
future reference. If you exchange shares subject to a CDSC, the transaction will
not be subject to the CDSC. However, when you redeem the shares acquired through
the exchange, the redemption may be subject to the CDSC, depending upon when you
originally purchased the shares. The CDSC will be computed using the schedule of
any fund into or from which you have exchanged your shares that would result in
your paying the highest CDSC applicable to your class of shares. In computing
the CDSC, the length of time you have owned your shares will be measured from
the date of original purchase and will not be affected by any exchange.
An exchange of Class B shares into any of the Vista money market funds
other than the Class B shares of the Vista Prime Money Market Fund will be
treated as a redemption -- and therefore subject to the conditions of the CDSC
- -- and a subsequent purchase. Class B shares of any Vista non-money market fund
may be exchanged into the Class B shares of the Vista Prime Money Market Fund in
order to continue the aging of the initial purchase of such shares.
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive
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<PAGE>
exchange activity and in other circumstances where Vista management or the
Trustees believe doing so would be in the best interests of the Fund, the Fund
reserves the right to revise or terminate the exchange privilege, limit the
amount or number of exchanges or reject any exchange. In addition, any
shareholder who makes more than ten exchanges of shares involving the Fund in a
year or three in a calendar quarter will be charged a $5.00 administration fee
for each such exchange. Shareholders would be notified of any such action to the
extent required by law. Consult the Vista Service Center before requesting an
exchange. See the SAI to find out more about the exchange privilege.
Reinstatement privilege. Class A shareholders have a one time privilege of
reinstating their investment in the Fund at net asset value next determined
subject to written request within 90 calendar days of the redemption,
accompanied by payment for the shares (not in excess of the redemption). Class B
shareholders who have redeemed their shares and paid a CDSC with such redemption
may purchase Class A shares with no initial sales charge (in an amount not in
excess of their redemption proceeds) if the purchase occurs within 90 days of
the redemption of the Class B shares.
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each business day of the Fund, by
dividing the net assets of the Fund attributable to that class by the total
number of outstanding shares of that class. Values of assets held by the Fund
(i.e., the value of its investment in the Portfolio and its other assets) are
determined on the basis of their market or other fair value, as described in the
SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund distributes any net investment income at least quarterly and any
net realized capital gains at least annually. Distributions from capital gains
are made after applying any available capital loss carryovers. Distributions
paid by the Fund with respect to Class A shares will generally be greater than
those paid with respect to Class B shares because expenses attributable to Class
B shares will generally be higher.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares without a sales charge; (2) receive
distributions from net investment income in cash or by ACH to a pre-established
bank account while reinvesting capital gains distributions in additional shares
without a sales charge; or (3) receive all distributions in cash or by ACH. You
can change your distribution option by notifying the Vista Service Center in
writing. If you do not select an option when you open your account, all
distributions will be reinvested. All distributions not paid in cash or by ACH
will be reinvested in shares of the class on which the distributions are paid.
You will receive a statement confirming reinvestment of distributions in
additional Fund shares promptly following the quarter in which the reinvestment
occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
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All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Distribution Plans
The Fund's distributor is Vista Fund Distributors, Inc. ("VFD"). VFD is a
subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase. The Trust
has adopted Rule 12b-1 distribution plans for Class A and Class B shares which
provide that the Fund will pay distribution fees at annual rates of up to 0.25%
and 0.75% of the average daily net assets attributable to Class A and Class B
shares of the Fund, respectively. Payments under the distribution plans shall be
used to compensate or reimburse the Fund's distributor and broker-dealers for
services provided and expenses incurred in connection with the sale of Class A
and Class B shares, and are not tied to the amount of actual expenses incurred.
Payments may be used to compensate broker-dealers with trail or maintenance
commissions at an annual rate of up to 0.20% of the average daily net asset
value of Class A shares, or 0.25% of the average daily net asset value of the
Class B shares maintained in the Fund by customers of these broker-dealers.
Trail or maintenance commissions are paid to broker-dealers beginning the 13th
month following the purchase of shares by their customers. Some activities
intended to promote the sale of Class A and Class B shares will be conducted
generally by the Vista Family of Funds, and activities intended to promote the
Fund's Class A or Class B shares may also benefit the Fund's other shares and
other Vista funds.
Class A shares are also permitted to pay an additional fee at an annual
rate of up to 0.05% of its average daily net asset value in anticipation of, or
as reimbursement for, expenses incurred in connection with print or electronic
media advertising in connection with the sale of Fund shares. When such expenses
are incurred, the maximum compensation paid by the Class A shares under the
Class A distribution plan would be at an annual rate of 0.25% of its average
daily net asset value.
VFD may provide promotional incentives to broker-dealers that meet
specified sales targets for one or more Vista funds. These incentives may
include gifts of up to $100 per person annually; an occasional meal, ticket to a
sporting event or theater or entertainment for broker-dealers and their guests;
and payment or reimbursement for travel expenses, including lodging and meals,
in connection with attendance at training and educational meetings within and
outside the U.S.
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own or Class A and Class B shares of the Fund. These
services include assisting with purchase and redemption transactions,
maintaining shareholder accounts and records, furnishing customer statements,
transmitting shareholder reports and communications to customers and other
similar shareholder liaison
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<PAGE>
services. For performing these services, each shareholder servicing agent
receives an annual fee of up to 0.25% of the average daily net assets of or
Class A and Class B shares of the Fund held by investors for whom the
shareholder servicing agent maintains a servicing relationship. Shareholder
servicing agents may subcontract with other parties for the provision of
shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator and Sub-Administrator
Chase acts as the administrator for the Fund and the Portfolio and is
entitled to receive from each of the Fund and the Portfolio a fee computed daily
and paid monthly at an annual rate equal to 0.05% of their respective average
daily net assets.
VFD provides certain sub-administrative services to the Fund pursuant to
a distribution and sub-administration agreement and is entitled to receive a
fee for these services from the Fund at an annual rate equal to 0.05% of the
Fund's average daily net assets. VFD has agreed to use a portion of this fee to
pay for certain expenses incurred in connection with organizing new series of
the Trust and certain other ongoing expenses of the Trust. VFD is located at 101
Park Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Shareholder servicing and
distribution fees are allocated to specific classes of the Fund. In addition,
the Fund may allocate transfer agency and certain other expenses by class.
Service providers to the Fund may, from time to time, voluntarily waive all or a
portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Shares have no
preemptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one
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vote for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of the Fund generally vote
together except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class.
The Fund issues multiple classes of shares. This Prospectus relates only
to Class A and Class B shares of the Fund. The Fund offers other classes of
shares in addition to these classes. The categories of investors that are
eligible to purchase shares and minimum investment requirements may differ for
each class of Fund shares. In addition, other classes of Fund shares may be
subject to differences in sales charge arrangements, ongoing distribution and
service fee levels, and levels of certain other expenses, which will affect the
relative performance of the different classes. Investors may call 1-800-34-VISTA
to obtain additional information about other classes of shares of the Fund that
are offered. Any person entitled to receive compensation for selling or
servicing shares of the Fund may receive different levels of compensation with
respect to one class of shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Unique Characteristics of Master/Feeder Fund Structure
Unlike other mutual funds which directly acquire and manage their own
portfolio securities, the Fund invests all of its investable assets in the
Portfolio, a separate registered investment company. Therefore, a shareholder's
interest in the Portfolio's securities is indirect. In addition to selling a
beneficial interest to the Fund, the Portfolio may sell beneficial interests to
other mutual funds or institutional investors. Such investors will invest in the
Portfolio on the same terms and conditions and will pay a proportionate share of
the Portfolio's expenses. However, other investors investing in the Portfolio
are not required to sell their shares at the same public offering prices as the
Fund, and may bear different levels of ongoing expenses than the Fund.
Shareholders of the Fund should be aware that these differences may result in
differences in returns experienced in the different funds that invest in the
Portfolio. Such differences in returns are also present in other mutual fund
structures.
Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns. Additionally, the Portfolio
may become less diverse, resulting in increased portfolio risk. However, this
possibility also exists for traditionally structured funds which have large or
institutional investors. Funds with a greater pro rata ownership in the
Portfolio could have effective voting control of the operations of the
Portfolio. Whenever the Trust is requested to vote on matters pertaining to the
Portfolio, the Trust will hold a meeting of shareholders of the Fund and will
cast all of its votes in the same proportion as do the Fund's shareholders.
Shares of the Fund for which no voting instructions have been received will be
voted in the same proportion as those shares for which voting instructions are
received. Certain changes in the Portfolio's objective, policies or restrictions
may require the Trust to withdraw the Fund's interest in the Portfolio. Any
withdrawal could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution from the Portfolio). The Fund could incur
brokerage fees or other transaction costs in converting such securities to cash.
In addition, a distribution in kind may result in a less diversified portfolio
of investments or adversely affect the liquidity of the Fund.
State securities regulations generally do not permit the same individuals
who are disinterested Trustees of the Trust to be Trustees of the Portfolio
absent the adoption of written procedures by a majority of the disinterested
Trustees of the Trust reasonably appropriate to deal with potential conflicts of
interest up to and including creating
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<PAGE>
a separate Board of Trustees. The Trustees of the Trust, including a majority of
the disinterested Trustees, have adopted procedures they believe are reasonably
appropriate to deal with any conflict of interest up to and including creating a
separate Board of Trustees.
Investors in the Fund may obtain information about whether an investment
in the Portfolio may be available through other funds by calling the Vista
Service Center at 1-800-34-VISTA.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income per share during a recent 30-day period by the
maximum public offering price per share of such class on the last day of that
period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the
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<PAGE>
Fund invested at the maximum public offering price (in the case of Class A
shares) or reflecting the deduction of any applicable contingent deferred sales
charge (in the case of Class B shares). Total return may also be presented for
other periods or without reflecting sales charges. Any quotation of investment
performance not reflecting the maximum initial sales charge or contingent
deferred sales charge would be reduced if such sales charges were used.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other mutual
funds and other investment vehicles. Quotation of investment performance for any
period when a fee waiver or expense limitation was in effect will be greater
than if the waiver or limitation had not been in effect. The Fund's performance
may be compared to other mutual funds, relevant indices and rankings prepared by
independent services. See the SAI.
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<PAGE>
MAKE THE MOST OF YOUR VISTA PRIVILEGES
The following services are available to you as a Vista mutual fund shareholder.
o SYSTEMATIC INVESTMENT PLAN - Invest as much as you wish ($100 or more) in
the first or third week of any month. The amount will be automatically
transferred from your checking or savings account.
o SYSTEMATIC WITHDRAWAL - Make regular withdrawals of $50 or more ($100 or
more for Class B accounts) monthly, quarterly or semiannually. A minimum
account balance of $5,000 is required to establish a systematic withdrawal
plan for Class A accounts.
o SYSTEMATIC EXCHANGE - Transfer assets automatically from one Vista account
to another on a regular, prearranged basis. There is no additional charge
for this service.
o FREE EXCHANGE PRIVILEGE - Exchange money between Vista funds in the same
class of shares without charge. The exchange privilege allows you to
adjust your investments as your objectives change.
Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange and systematic withdrawal or exchange.
o REINSTATEMENT PRIVILEGE - Class A shareholders have a one time privilege
of reinstating their investment in the Fund at net asset value next
determined subject to written request within 90 calendar days of the
redemption, accompanied by payment for the shares (not in excess of the
redemption).
Class B shareholders who have redeemed their shares and paid a CDSC with
such redemption may purchase Class A shares with no initial sales charge
(in an amount not in excess of their redemption proceeds) if the purchase
occurs within 90 days of the redemption of the Class B shares.
For more information about any of these services and privileges, call your
shareholder servicing agent, investment representative or the Vista Service
Center at 1-800-34-VISTA. These privileges are subject to change or termination.
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<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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<PAGE>
PROSPECTUS
VISTA[SM] GROWTH AND INCOME FUND
Institutional Shares
May 6, 1996
Investment Strategy: Growth and Income
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-622-4273. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
The Fund, unlike many other investment companies which directly acquire
and manage their own portfolios of securities, seeks its investment objective by
investing all of its investable assets in Growth and Income Portfolio (the
"Portfolio"), an open-end management investment company with investment
objectives identical to those of the Fund. Investors should carefully consider
this investment approach. For additional information regarding this investment
structure, see "Unique Characteristics of Master/Feeder Fund Investment
Structure" on page 13.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary........................................................
Fund Objective.........................................................
Investment Policies....................................................
Management.............................................................
How to Purchase, Redeem and Exchange Shares............................
How the Fund Values its Shares.........................................
How Distributions are Made; Tax Information............................
Other Information Concerning the Fund..................................
Performance Information................................................
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<PAGE>
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the Fund based on
expenses incurred in the most recent fiscal year. The example shows the
cumulative expenses attributable to a hypothetical $1,000 investment over
specified periods.
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee............................................ 0.40%
12b-1 Fee.......................................................... None
Shareholder Servicing Fee.......................................... 0.25%
Other Expenses..................................................... 0.35%
-----
Total Fund Operating Expenses...................................... 1.00%
=====
Example
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Year 5 Years 10 Years
------ ------ ------- --------
Institutional Shares..... $10 $32 $55 $122
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
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<PAGE>
FUND OBJECTIVES
Vista Growth and Income Fund seeks to provide long-term capital
appreciation and dividend income. The Fund is not intended to be a complete
investment program, and there is no assurance it will achieve its objectives.
INVESTMENT POLICIES
Investment Approach
The Fund seeks to achieve its objective by investing all of its investable
assets in the Portfolio. The Portfolio invests in common stocks of issuers
with a broad range of market capitalizations. Under normal market conditions,
the Portfolio will invest at least 80% of its total assets in common stocks. In
addition, the Portfolio may invest up to 20% of its total assets in convertible
securities.
The Portfolio's advisers intend to utilize both quantitative and
fundamental research to identify undervalued stocks with a catalyst for positive
change. The advisers believe that the market risk involved in seeking capital
appreciation will be moderated to an extent by the anticipated dividend returns
on the stocks in which the Portfolio invests.
The Portfolio is classified as a "non-diversified" fund under federal
securities law. The Portfolio's assets may be more concentrated in the
securities of any single issuer or group of issuers than if the Portfolio were
diversified.
The Portfolio may invest any portion of its assets not invested as
described above in high quality money market instruments and repurchase
agreements. For temporary defensive purposes, the Portfolio may invest without
limitation in these instruments as well as investment grade debt securities. To
the extent that the Portfolio departs from its investment policies during
temporary defensive periods, the Fund's investment objective may not be
achieved.
Fund Structure
The Portfolio has an objective identical to that of the Fund. The Fund may
withdraw its investment from the Portfolio at any time if the Trustees determine
that it is in the best interest of the Fund to do so. Upon any such withdrawal,
the Trustees would consider what action might be taken, including investing all
of the Fund's investable assets in another pooled investment entity having
substantially the same objective and policies as the Fund or retaining an
investment adviser to manage the Fund's assets directly.
Other Investment Practices
The Portfolio may also engage in the following investment practices, when
consistent with the Portfolio's overall objective and policies. These practices,
and certain associated risks, are more fully described in the SAI.
Foreign Securities. The Portfolio may invest up to 20% of its total assets
in foreign securities, including Depositary Receipts. Since foreign securities
are normally denominated and traded in foreign currencies, the values of the
Portfolio's foreign investments may be affected favorably or unfavorably by
currency exchange rates and exchange control regulations. There may be less
information publicly available about foreign companies than U.S. companies, and
they are not generally subject to accounting, auditing and financial reporting
standards and practices comparable to those in the U.S. The securities of
foreign companies may be less liquid and more volatile than the securities of
comparable U.S. companies. Foreign settlement procedures and trade regulations
may involve certain
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<PAGE>
risks (such as delay in payment or delivery of securities or in the recovery of
the Portfolio's assets held abroad) and expenses. It is possible that
nationalization or expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial instability and
diplomatic developments could affect the value of the Portfolio's investments in
certain foreign countries. Foreign laws may restrict the ability to invest in
certain countries or issuers and special tax considerations will apply to
foreign securities. The risks can increase if the Portfolio invests in
securities of issuers in emerging markets.
The Portfolio may invest its assets in securities of foreign issuers in
the form of American Depositary Receipts, European Depositary Receipts, Global
Depositary Receipts or other similar securities representing securities of
foreign issuers (collectively, "Depositary Receipts"). The Portfolio treats
Depositary Receipts as interests in the underlying securities for purposes of
its investment policies. The Portfolio will limit its investment in Depositary
Receipts not sponsored by the issuer of the underlying securities to no more
than 5% of the value of its net assets (at the time of investment).
Supranational and ECU Obligations. The Portfolio may invest in securities
issued by supranational organizations, which include organizations such as The
World Bank, the European Community, the European Coal and Steel Community and
the Asian Development Bank. The Portfolio may also invest in securities
denominated in the ECU, which is a "basket" consisting of specified amounts of
the currencies of certain member states of the European Community. These
securities are typically issued by European governments and supranational
organizations.
Convertible Securities. The Portfolio may invest up to 20% of its net
assets in convertible securities, which are securities generally offering fixed
interest or dividend yields which may be converted either at a stated price or
stated rate for common or preferred stock. Although to a lesser extent than with
fixed-income securities generally, the market value of convertible securities
tends to decline as interest rates increase, and increase as interest rates
decline. Because of the conversion feature, the market value of convertible
securities also tends to vary with fluctuations in the market value of the
underlying common or preferred stock.
Money Market Instruments. The Portfolio may invest in cash or
high-quality, short-term money market instruments. Such instruments may include
U.S. Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Investment Grade Debt Securities. Investment grade debt securities are
securities rated in the category BBB or higher by Standard & Poor's Corporation
("S&P"), or Baa or higher by Moody's Investors Services, Inc. ("Moody's") or the
equivalent by another national rating organiztion, or, if unrated, determined by
the advisers to be of comparable quality.
Repurchase Agreements, Securities Loans and Forward Commitments. The
Portfolio may enter into agreements to purchase and resell securities at an
agreed-upon price and time. The Portfolio also has the ability to lend portfolio
securities in an amount equal to not more than 30% of its total assets to
generate additional income. These transactions must be fully collateralized at
all times. The Portfolio may purchase securities for delivery at a future date,
which may increase its overall investment exposure and involves a risk of loss
if the value of the securities declines prior to the settlement date. These
transactions involve some risk to the Portfolio if the other party should
default on its obligation and the Portfolio is delayed or prevented from
recovering the collateral or completing the transaction.
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<PAGE>
Borrowings and Reverse Repurchase Agreements. The Portfolio may borrow
money from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Portfolio may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Portfolio enters into a reverse repurchase agreement,
it will establish a segregated account in which it will maintain liquid assets
on a daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Portfolio would be required to pay interest on amounts
obtained through reverse repurchase agreements, which are considered borrowings
under federal securities laws.
Stand-By Commitments. The Portfolio may enter into put transactions,
including transactions sometimes referred to as stand-by commitments, with
respect to securities in its portfolio. In these transactions, the Portfolio
would acquire the right to sell a security at an agreed upon price within a
specified period prior to its maturity date. These transactions involve some
risk to the Portfolio if the other party should default on its obligation and
the Portfolio is delayed or prevented from recovering the collateral or
completing the transaction. Acquisition of puts will have the effect of
increasing the cost of the securities subject to the put and thereby reducing
the yields otherwise available from such securities.
Other Investment Companies. The Portfolio may invest up to 10% of its
total assets in shares of other investment companies, subject to applicable
regulatory limitations.
STRIPS. The Portfolio may invest up to 20% of its total assets in
separately traded principal and interest components of securities backed by the
full faith and credit of the U.S. Government, including instruments known as
"STRIPS". The value of these instruments tends to fluctuate more in response to
changes in interest rates than the value of ordinary interest-paying debt
securities with similar maturities. The risk is greater when the period to
maturity is longer.
Derivatives and Related Instruments. The Portfolio may invest its assets
in derivative and related instruments to hedge various market risks or to
increase the Portfolio's income or gain. Some of these instruments will be
subject to asset segregation requirements to cover the Portfolio's obligations.
The Portfolio may (i) purchase, write and exercise call and put options on
securities and securities indexes (including using options in combination with
securities, other options or derivative instruments); (ii) enter into swaps,
futures contracts and options on futures contracts; (iii) employ forward
currency contracts; and (iv) purchase and sell structured products, which are
instruments designed to restructure or reflect the characteristics of certain
other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Portfolio invests may be particularly sensitive to changes in prevailing
economic conditions and market value. The ability of the Portfolio to
successfully utilize these instruments may depend in part upon the ability of
the Portfolio's advisers to forecast these factors correctly. Inaccurate
forecasts could expose the Portfolio to a risk of loss. There can be no
guarantee that there will be a correlation between price movements in a hedging
instrument and in the portfolio assets being hedged. The Portfolio is not
required to use any hedging strategies. Hedging strategies, while reducing risk
of loss, can also reduce the opportunity for gain. Derivatives transactions not
involving hedging may have speculative characteristics, involve leverage and
result in more risk to the Portfolio than hedging strategies using the same
instruments. There can be no assurance that a liquid market will exist at a time
when the Portfolio seeks to close out a derivatives position. Activities of
large traders in the futures and securities markets involving arbitrage,
"program trading," and other investment strategies may cause price distortions
in derivatives markets. In certain instances, particularly those involving
over-the-counter transactions or forward contracts, there is a greater potential
that a counterparty or broker may default. In the event of a default, the
Portfolio may experience a loss. For additional information concerning
derivatives, related instruments and the associated risks, see the SAI.
Portfolio Turnover. The frequency of the Portfolio's portfolio
transactions will vary from year to year. The Portfolio's investment policies
may lead to frequent changes in investments, particularly in periods of rapidly
changing market conditions. High portfolio turnover rates would generally result
in higher transaction costs, including brokerage commissions or dealer mark-ups,
and would make it more difficult for the Portfolio to qualify as a registered
investment company under federal tax law. See "How Distributions are Made; Tax
Information" and "Other Information Concerning the Fund -- Certain Regulatory
Matters."
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<PAGE>
Limiting Investment Risks
Specific investment restrictions help the Portfolio limit investment risks
for the Fund's shareholders. These restrictions prohibit the Portfolio from: (a)
with respect to 50% of its total assets, holding more than 10% of the voting
securities of any issuer; (b) investing more than 15% of its net assets in
illiquid securities (which include securities restricted as to resale unless
they are determined to be readily marketable in accordance with procedures
established by the Board of Trustees); or (c) investing more than 25% of its
total assets in any one industry. A complete description of these and other
investment policies is included in the SAI. Except for restriction (c) above and
investment policies designated as fundamental in the SAI, the investment
policies (including their investment objective) of the Portfolio and the Fund
are not fundamental. Shareholder approval is not required to change any
non-fundamental investment policy. However, in the event of a change in the
Fund's or Portfolio's investment objective, shareholders will be given at least
30 days prior written notice.
Risk Factors
The net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities held by the Portfolio. The Fund does not
constitute a balanced or complete investment program. The Fund is subject to the
general risks and considerations associated with equity investing.
Because the Portfolio is "non-diversified," the value of the Fund's shares
is more susceptible to developments affecting issuers in which the Portfolio
invests.
For a discussion of certain other risks associated with the Portfolio's
additional investment activities, see "Other Investment Practices" above.
MANAGEMENT
The Portfolio's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the
Portfolio pursuant to an Investment Advisory Agreement and has overall
responsibility for investment decisions of the Portfolio, subject to the
oversight of the Board of Trustees. Chase is a wholly-owned subsidiary of The
Chase Manhattan Corporation, a bank holding company. Chase and its predecessors
have over 100 years of money management experience. For its investment advisory
services to the Portfolio, Chase is entitled to receive an annual fee computed
daily and paid monthly based at an annual rate equal to 0.40% of the Portfolio's
average daily net assets. Chase is located at 270 Park Avenue, New York, New
York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Portfolio pursuant to a Sub-Investment
Advisory Agreement between CAM and Chase. CAM is a wholly-owned operating
subsidiary of Chase. CAM makes investment decisions for the Portfolio on a
day-to-day basis. For these services, CAM is entitled to receive a fee, payable
by Chase from its advisory fee, at an annual rate equal to 0.20% of the
Portfolio's average daily net assets. CAM was recently formed for the purpose of
providing discretionary investment advisory services to institutional clients
and to consolidate Chase's investment management function. The same individuals
who serve as portfolio managers for
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Chase also serve as portfolio managers for CAM. CAM is located at 1211 Avenue of
the Americas, New York, New York 10036.
Portfolio Managers. Dave Klassen, Director of Domestic Equity Management
at Chase, and Greg Adams, Director of U.S. Equity Research at Chase, have been
responsible for the day-to-day management of the Portfolio since March 1995. Mr.
Klassen joined Chase in March 1992 and, in addition to co-managing the Vista
Growth and Income Portfolio, is responsible for co-managing the Vista Small Cap
Equity Fund and the Vista Capital Growth Fund. Prior to joining Chase, Mr.
Klassen was a vice president and portfolio manager at Dean Witter Reynolds,
responsible for managing several mutual funds and other accounts. Mr. Adams
joined Chase in 1987 and is also responsible for co-managing the Vista Balanced
Fund. In addition, Mr. Adams has been responsible for overseeing the proprietary
computer model program used in the U.S. equity selection process.
HOW TO PURCHASE, REDEEM, AND EXCHANGE SHARES
How to Purchase Shares
Institutional Shares may be purchased through selected financial service
firms, such as broker-dealer firms and banks ("Dealers") who have entered into a
selected dealer agreement with the Fund's distributor on each business day
during which the New York Stock Exchange is open for trading ("Fund Business
Day"). Qualified investors are defined as institutions, trusts, partnerships,
corporations, qualified and other retirement plans and fiduciary accounts opened
by a bank, trust company or thrift institution which exercises investment
authority over such accounts. The Fund reserves the right to reject any purchase
order or cease offering shares for purchase at any time.
Institutional Shares are sold at their public offering price, which is
their next determined net asset value. Orders received by Dealers in proper form
prior to the New York Stock Exchange closing time are confirmed at that day's
offering price, provided the order is received by the Vista Service Center prior
to its close of business. Dealers are responsible for forwarding orders for the
purchase of shares on a timely basis. Fund shares normally will be maintained in
book entry form and share certificates will be issued only upon request.
Management reserves the right to refuse to sell shares of the Fund to any
institution.
Federal regulations require that each investor provide a certified
Taxpayer Identification Number upon opening an account.
Minimum Investments
The Fund has established a minimum initial investment amount of $1,000,000
for the purchase of Institutional Shares. There is no minimum for subsequent
investments. Purchases of Institutional Shares offered by other non-money market
Vista funds may be aggregated with purchases of Institutional Shares of the Fund
to meet the $1,000,000 minimum initial investment amount requirement.
How to Redeem Shares
You may redeem all or any portion of the shares in your account at any
time at the net asset value next determined after a redemption request in proper
form is furnished by you to your Dealer and transmitted to and received by the
Vista Service Center. A wire redemption may be requested by telephone or wire to
the Vista Service Center. For telephone redemptions, call the Vista Service
Center at 1-800-622-4273.
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<PAGE>
In making redemption requests, the names of the registered shareholders on
your account and your account number must be supplied, along with any
certificates that represent shares you want to sell. The price you will receive
is the next net asset value calculated after the Fund receives your request in
proper form. In order to receive that day's net asset value, the Vista Service
Center must receive your request before the close of regular trading on the New
York Stock Exchange.
The Fund generally sends you payment for your shares by wire in federal
funds on the business day after your request is received. Under unusual
circumstances, the Fund may suspend redemptions, or postpone payment for more
than seven days, as permitted by federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request or contact your
Dealer. The Telephone Redemption Privilege is not available if you were issued
certificates for shares that remain outstanding. The Telephone Redemption
Privilege may be modified or terminated without notice.
Selling shares through your Dealer. Your Dealer must receive your request
before the close of regular trading on the New York Stock Exchange to receive
that day's net asset value. Your Dealer will be responsible for furnishing all
necessary documentation to the Vista Service Center, and may charge you for its
services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $1,000,000. In the event of any such redemption, you will
receive at least 60 days notice prior to the redemption.
How to Exchange Your Shares
You can exchange your shares for Institutional Shares of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer Institutional Shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully prior to any exchange
and retained for future reference.
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive
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exchange activity and in other circumstances where Vista management or the
Trustees believe doing so would be in the best interests of the Fund, the Fund
reserves the right to revise or terminate the exchange privilege, limit the
amount or number of exchanges or reject any exchange. In addition, any
shareholder who makes more than ten exchanges of shares involving the Fund in a
year or three in a calendar quarter will be charged a $5.00 administration fee
for each such exchange. Shareholders would be notified of any such action to the
extent required by law. Consult the Vista Service Center before requesting an
exchange. The exchange privilege is subject to change or termination. See the
SAI to find out more about the exchange privilege.
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each Fund Business Day, by
dividing the net assets of the Fund attributable to that class by the total
number of outstanding shares of that class. Values of assets held by the Fund
(i.e., the value of its investment in the Portfolio and its other assets) are
determined on the basis of their market or other fair value, as described in the
SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund distributes any net investment income at least quarterly and any
net realized capital gains at least annually. Distributions from capital gains
are made after applying any available capital loss carryovers.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares; (2) receive distributions from net
investment income in cash or by ACH to a pre-established bank account while
reinvesting capital gains distributions in additional shares; or (3) receive all
distributions in cash or by ACH. You can change your distribution option by
notifying the Vista Service Center in writing. If you do not select an option
when you open your account, all distributions will be reinvested. All
distributions not paid in cash or by ACH will be reinvested in shares of the
class on which the distributions are paid. You will receive a statement
confirming reinvestment of distributions in additional Fund shares promptly
following the quarter in which the reinvestment occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
A portion of the ordinary income dividends paid by the Fund may qualify
for the 70% dividends-received deduction for corporate shareholders.
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<PAGE>
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Institutional Shares of the Fund. These services
include assisting with purchase and redemption transactions, maintaining
shareholder accounts and records, furnishing customer statements, transmitting
shareholder reports and communications to customers and other similar
shareholder liaison services. For performing these services, each shareholder
servicing agent receives an annual fee of up to 0.25% of the average daily net
assets of Institutional Shares of the Fund held by investors for whom the
shareholder servicing agent maintains a servicing relationship. Shareholder
servicing agents may subcontract with other parties for the provision of
shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing
orders to purchase, redeem and exchange Fund shares and responding to certain
customer inquiries. The amount of such compensation may be up to 0.10% annually
of the average net assets of the Fund attributable to shares of the Fund held
by customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator
Chase acts as the administrator for the Fund and the Portfolio and is
entitled to receive from each of the Fund and the Portfolio a fee computed daily
and paid monthly at an annual rate equal to 0.05% of their respective average
daily net assets.
Sub-Administrator and Distributor
Vista Fund Distributors, Inc. ("VFD") acts as the Fund's sub-administrator
and distributor. VFD is a subsidiary of The BISYS Group, Inc. and is
unaffiliated with Chase. For the sub-administrative services it performs, VFD is
entitled to receive a fee from the Fund at an annual rate equal to 0.05% of the
Fund's average daily net assets. VFD has agreed to use a portion of this fee to
pay for certain expenses incurred in connection with organizing new series of
the Trust and certain other ongoing expenses of the Trust. VFD is located at 101
Park Avenue, New York, New York 10178.
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<PAGE>
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Shareholder servicing and
distribution fees are allocated to specific classes of the Fund. In addition,
the Fund may allocate transfer agency and certain other expenses by class.
Service providers to the Fund may, from time to time, voluntarily waive all or a
portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Shares have no
pre-emptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of the Fund generally vote
together except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class.
The Fund issues multiple classes of shares. This Prospectus relates only
to Institutional Shares of the Fund, one class of shares offered by the Fund.
Institutional Shares may be purchased only by qualified investors that make an
initial investment of $1,000,000 or more. "Qualified investors" are defined as
institutions, trusts, partnerships, corporations, qualified and other retirement
plans and fiduciary accounts opened by a bank, trust company or thrift
institution which exercises investment authority over such accounts. The Fund
offers other classes of shares in addition to these classes. The categories of
investors that are eligible to purchase shares may differ for each class of Fund
shares. In addition, other classes of Fund shares may be subject to differences
in sales charge arrangements, ongoing distribution and service fee levels, and
levels of certain other expenses, which will affect the relative performance of
the different classes. Investors may call 1-800-622-4273 to obtain additional
information about other classes of shares of the Fund that are offered. Any
person entitled to receive compensation for selling or servicing shares of the
Fund may receive different levels of compensation with respect to one class of
shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
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<PAGE>
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Unique Characteristics of Master/Feeder Fund Structure
Unlike other mutual funds which directly acquire and manage their own
portfolio securities, the Fund invests all of its investable assets in the
Portfolio, a separate registered investment company. Therefore, a shareholder's
interest in the Portfolio's securities is indirect. In addition to selling a
beneficial interest to the Fund, the Portfolio may sell beneficial interests to
other mutual funds or institutional investors. Such investors will invest in the
Portfolio on the same terms and conditions and will pay a proportionate share of
the Portfolio's expenses. However, other investors investing in the Portfolio
are not required to sell their shares at the same public offering prices as the
Fund, and may bear different levels of ongoing expenses than the Fund.
Shareholders of the Fund should be aware that these differences may result in
differences in returns experienced in the different funds that invest in the
Portfolio. Such differences in returns are also present in other mutual fund
structures.
Smaller funds investing in the Portfolio may be materially affected
by the actions of larger funds investing in the Portfolio. For example, if a
large fund withdraws from the Portfolio, the remaining funds may experience
higher pro rata operating expenses, thereby producing lower returns.
Additionally, the Portfolio may become less diverse, resulting in increased
portfolio risk. However, this possibility also exists for traditionally
structured funds which have large or institutional investors. Funds with a
greater pro rata ownership in the Portfolio could have effective voting control
of the operations of the Portfolio. Whenever the Trust is requested to vote on
matters pertaining to the Portfolio, the Trust will hold a meeting of
shareholders of the Fund and will cast all of its votes in the same proportion
as do the Fund's shareholders. Shares of the Fund for which no voting
instructions have been received will be voted in the same proportion as those
shares for which voting instructions are received. Certain changes in the
Portfolio's objective, policies or restrictions may require the Trust to
withdraw the Fund's interest in the Portfolio. Any withdrawal could result in a
distribution in kind of portfolio securities (as opposed to a cash distribution
from the Portfolio). The Fund could incur brokerage fees or other transaction
costs in converting such securities to cash. In addition, a distribution in kind
may result in a less diversified portfolio of investments or adversely affect
the liquidity of the Fund.
State securities regulations generally do not permit the same
individuals who are disinterested Trustees of the Trust to be Trustees of the
Portfolio absent the adoption of written procedures by a majority of the
disinterested Trustees of the Trust reasonably appropriate to deal with
potential conflicts of interest up to and including creating a separate Board of
Trustees. The Trustees of the Trust, including a majority of the disinterested
Trustees, have adopted procedures they believe are reasonably appropriate to
deal with any conflict of interest up to and including creating a separate Board
of Trustees.
Investors in the Fund may obtain information about whether an investment
in the Portfolio may be available through other funds by calling the Vista
Service Center at 1-800-622-4273.
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<PAGE>
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income per share during a recent 30-day period by the
maximum public offering price per share of such class on the last day of that
period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the public offering price. Total return may also be presented for
other periods.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other mutual
funds and other investment vehicles. Quotation of investment performance for any
period when a fee waiver or expense limitation was in effect will be greater
than if the waiver or limitation had not been in effect. The Fund's
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performance may be compared to other mutual funds, relevant indices and rankings
prepared by independent services. See the SAI.
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<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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<PAGE>
PROSPECTUS
VISTA[SM] CAPITAL GROWTH FUND
Class A and B Shares
May 6, 1996
Investment Strategy: Capital Growth
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-34-VISTA. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
The Fund, unlike many other investment companies which directly acquire
and manage their own portfolios of securities, seeks its investment objective by
investing all of its investable assets in Capital Growth Portfolio (the
"Portfolio"), an open-end management investment company with an investment
objective identical to those of the Fund. Investors should carefully consider
this investment approach. For additional information regarding this investment
structure, see "Unique Characteristics of Master/Feeder Fund Investment
Structure" on page 19.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary .......................................................
The expenses you might pay on your Fund investment, including examples.
Financial Highlights ..................................................
How the Fund has performed
Fund Objective.........................................................
Investment Policies ...................................................
The kinds of securities in which the Fund invests,
investment policies and techniques, and risks
Management ............................................................
Chase Manhattan Bank, the Fund's adviser; Chase Asset Management,
the Fund's sub-adviser, and the individuals who manage the Fund
About Your Investment .................................................
Alternative sales arrangements
How to Buy, Sell and Exchange Shares...................................
How the Fund Values its Shares.........................................
How Distributions are Made; Tax Information ...........................
How the Fund distributes its earnings, and
tax treatment related to those earnings
Other Information Concerning the Fund .................................
Distribution plans, shareholder servicing agents, administration,
custodian, expenses, organization, master/feeder Fund structure and
regulatory matters
Performance Information ...............................................
How performance is determined, stated and/or advertised
Make the Most of Your Vista Privileges.................................
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EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the Fund based on
expenses incurred in the most recent fiscal year. The examples show the
cumulative expenses attributable to a hypothetical $1,000 investment over
specified periods.
Class A Class B
Shareholder Transaction Expenses Shares Shares
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)................ 4.75% None
Maximum Deferred Sales Charge
(as a percentage of the lower of original
purchase price or redemption proceeds)(*).......... None 5.00%
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee............................ 0.40% 0.40%
12b-1 Fee(**)...................................... 0.25% 0.75%
Shareholder Servicing Fee.......................... 0.25% 0.25%
Other Expenses..................................... 0.45% 0.45%
----- -----
Total Fund Operating Expenses...................... 1.35% 1.85%
===== =====
Examples
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares(+)................ $61 $88 $118 $202
Class B Shares:
Assuming complete
redemption at the
end of the
period(++)(+++)................ $70 $91 $123 $204
Assuming no
redemptions (+++).............. $19 $58 $100 $204
- -----------------------
* The maximum deferred sales charge on Class B shares applies to redemptions
during the first year after purchase; the charge generally declines by 1%
annually thereafter (except in the fourth year), reaching zero after six
years. See "How to Buy, Sell and Exchange Shares."
-3-
<PAGE>
** Long-term shareholders in mutual funds with 12b-1 fees, such as Class A and
Class B shareholders of the Fund, may pay more than the economic equivalent
of the maximum front-end sales charge permitted by rules of the National
Association of Securities Dealers, Inc.
+ Assumes deduction at the time of purchase of the maximum sales charge.
++ Assumes deduction at the time of redemption of the maximum applicable
deferred sales charge.
+++ Ten-year figures assume conversion of Class B shares to Class A shares at
the beginning of the ninth year after purchase. See "How to Buy, Sell and
Exchange Shares."
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
-4-
<PAGE>
FINANCIAL HIGHLIGHTS
The table set forth below provides selected per share data and ratios for
both Class A and Class B shares outstanding for each of the periods shown. This
information is supplemented by and should be read in conjunction with financial
statements and accompanying notes appearing in the Fund's Annual Report to
Shareholders for the fiscal year ended October 31, 1995, which is incorporated
by reference into the SAI. Shareholders can obtain a copy of this annual report
by contacting the Fund or their Shareholder Servicing Agent. The financial
statements and notes, as well as the financial information set forth in the
table below for each of the five years in the period ended October 31, 1995,
have been audited by Price Waterhouse LLP, independent accountants, whose report
thereon is also included in the Annual Report to Shareholders.
<TABLE>
<CAPTION>
VISTA CAPITAL GROWTH FUND
Class A Class B
------------------------------------------------------------------------------- --------------------
Year ended October 31, 9/8/87* Year 11/4/93**
----------------------------------------------------------------------- to Ended through
1995 1994 1993 1992 1991 1990 1989 1988 10/31/87 10/31/95 10/31/94
------ ------ ------ ------ ------ ------ ------ ---- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
- -------------------
PERFORMANCE
-----------
Net Asset Value, Beginning of
Period ..................... $32.17 $32.01 $25.12 $22.02 $12.33 $16.23 $11.56 $10.00 $10.00 $32.03 $31.38
----- ----- ----- ----- ----- ------ ----- ----- ----- ----- ------
Income from Investment
Operations:
Net Investment Income (Loss) 0.189 0.099@ 0.064 0.078 (0.011) 0.436 0.500 0.117 0.000 0.044 0.011@
Net Gains or (Losses) in
Securities (both realized
and unrealized) ........... 4.160 0.719 7.173 3.044 9.805 (3.141) 5.164 1.498 0.000 4.100 1.296
----- ----- ----- ----- ----- ------ ----- ----- ----- ----- ------
Total from Investment
Operations............... 4.349 0.818 7.237 3.122 9.794 (2.705) 5.664 1.615 0.000 4.144 1.307
----- ----- ----- ----- ----- ------ ----- ----- ----- ----- ------
Less Distributions:
Dividends from Net
Investment Income........ 0.189 0.027 0.093 0.017 0.109 0.592 0.320 0.055 0.000 0.111 0.026
Distributions from
Capital Gains ........ 0.676 0.631 0.257 0.000 0.000 0.598 0.675 0.000 0.000 0.676 0.631
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total Distributions. ....... 0.865 0.658 0.350 0.017 0.109 1.190 0.995 0.055 0.000 0.787 0.657
----- ----- ----- ----- ----- ------ ----- ----- ----- ----- -----
Net Asset Value, End
of Period ................. $35.65 $32.17 $32.01 $25.12 $22.02 $12.33 $16.23 $11.56 $10.00 $35.39 $32.03
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return(1)...... ........ 13.89% 2.62% 29.06% 14.16% 79.96% (18.11%) 52.12% 16.15% 0.00% 13.34% 4.19%
Ratios/Supplemental Data(2):
Net Assets, End of
Period (000 omitted) $747,575 $549,411 $225,235 $39,836 $9,334 $4,749 $4,652 $561 $13 $260,376 $124,223
Ratio of Expenses to
Average Net Assets....... 1.51% 1.49% 1.49% 1.40% 1.27% 1.04% 0.00% 0.00% 0.00%# 2.01% 2.00%#
Ratio of Net Investment
Income to Average
Net Assets .............. 0.54% 0.33% 0.12% 0.32% (0.09%) 2.82% 3.87% 1.55% 0.00%# 0.02% (0.09%)#
Ratio of Expenses without
waivers and assumption of
expenses to Average Net
Assets........... ........ 1.53% 1.50% 1.49% 1.77% 3.44% 2.50% 2.50% 2.00% 2.00%# 2.02% 2.02%#
Ratio of Net Investment Income
without waivers and
assumption of expenses to
Average Net Assets ....... 0.52% 0.32% 0.12% (0.05%) (2.26%) 1.36% 1.37% (0.45%) (2.00%#) 0.01% (0.11%)#
Portfolio Turnover Rate ...... -- -- 43% 67% 83% 139% 189% 229% 0% -- --
</TABLE>
- ----------------------
# Annualized.
* Commencement of operations.
** Commencement of offering of classes of shares.
(2) Ratios include the Fund's share of portfolio income and expenses,
as appropriate.
@ Calculated based upon average shares outstanding.
-5-
<PAGE>
(1) Total return figures are calculated before taking into account the effect of
any front-end sales load on Class A shares or any contingent deferred sales
charge on Class B shares.
-6-
<PAGE>
FUND OBJECTIVE
Vista Capital Growth Fund seeks long-term capital growth. The Fund is not
intended to be a complete investment program, and there is no assurance it will
achieve its objective.
INVESTMENT POLICIES
Investment Approach
The Fund seeks to achieve its objective by investing all of its investable
assets in the Portfolio. The Portfolio will invest primarily in a broad
portfolio of common stocks. Under normal market conditions, the Portfolio will
invest at least 80% of its total assets in common stocks. The Portfolio will
seek to invest in stocks of companies with capitalizations of $750 million to
$4.0 billion. Current income, if any, is a consideration incidental to the
Portfolio's objective of long-term capital growth. The Portfolio's advisers
intend to utilize both quantitative and fundamental research to identify
undervalued stocks with a catalyst for positive change.
The Portfolio is classified as a "non-diversified" fund under federal
securities law. The Portfolio's assets may be more concentrated in the
securities of any single issuer or group of issuers than if the Portfolio were
diversified.
The Portfolio may invest any portion of its assets not invested in common
stocks in high quality money market instruments and repurchase agreements. For
temporary defensive purposes, the Portfolio may invest without limitation in
these instruments. To the extent that the Portfolio departs from its investment
policies during temporary defensive periods, the Fund's investment objective may
not be achieved.
Fund Structure
The Portfolio has an objective identical to that of the Fund. The Fund may
withdraw its investment from the Portfolio at any time if the Trustees determine
that it is in the best interest of the Fund to do so. Upon any such withdrawal,
the Trustees would consider what action might be taken, including investing all
of the Fund's investable assets in another pooled investment entity having
substantially the same objective and policies as the Fund or retaining an
investment adviser to manage the Fund's assets directly.
Other Investment Practices
The Portfolio may also engage in the following investment practices, when
consistent with the Portfolio's overall objective and policies. These practices,
and certain associated risks, are more fully described in the SAI.
Foreign Securities. The Portfolio may invest up to 20% of its total assets
in foreign securities, including Depositary Receipts. Since foreign securities
are normally denominated and traded in foreign currencies, the values of the
Portfolio's foreign investments may be affected favorably or unfavorably by
currency exchange rates and exchange control regulations. There may be less
information publicly available about foreign companies than U.S. companies, and
they are not generally subject to accounting, auditing and financial reporting
standards and practices comparable to those in the U.S. The securities of
foreign companies may be less liquid and more volatile than the securities of
comparable U.S. companies. Foreign settlement procedures and trade regulations
may involve certain risks (such as delay in payment or delivery of securities or
in the recovery of the Portfolio's assets held abroad) and expenses. It is
possible that nationalization or expropriation of assets, imposition of currency
exchange controls, confiscatory taxation, political or financial instability and
diplomatic developments could affect the value of the Portfolio's investments in
certain foreign countries. Foreign laws may restrict the ability to invest in
certain countries
-7-
<PAGE>
or issuers and special tax considerations will apply to foreign securities. The
risks can increase if the Portfolio invests in securities of issuers in emerging
markets.
The Portfolio may invest its assets in securities of foreign issuers in
the form of American Depositary Receipts, European Depositary Receipts, Global
Depositary Receipts or other similar securities representing securities of
foreign issuers (collectively, "Depositary Receipts"). The Portfolio treats
Depositary Receipts as interests in the underlying securities for purposes of
its investment policies. The Portfolio will limit its investment in Depositary
Receipts not sponsored by the issuer of the underlying securities to no more
than 5% of the value of its net assets (at the time of investment).
Money Market Instruments. The Portfolio may invest in cash or
high-quality, short-term money market instruments. Such instruments may include
U.S. Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Repurchase Agreements, Securities Loans and Forward Commitments. The
Portfolio may enter into agreements to purchase and resell securities at an
agreed-upon price and time. The Portfolio also has the ability to lend portfolio
securities in an amount equal to not more than 30% of its total assets to
generate additional income. These transactions must be fully collateralized at
all times. The Portfolio may purchase securities for delivery at a future date,
which may increase its overall investment exposure and involves a risk of loss
if the value of the securities declines prior to the settlement date. These
transactions involve some risk to the Portfolio if the other party should
default on its obligation and the Portfolio is delayed or prevented from
recovering the collateral or completing the transaction.
Borrowing and Reverse Repurchase Agreements. The Portfolio may borrow
money from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Portfolio may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Portfolio enters into a reverse repurchase agreement,
it will establish a segregated account in which it will maintain liquid assets
on a daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Portfolio would be required to pay interest on amounts
obtained through reverse repurchase agreements, which are considered borrowing
under federal securities laws.
Stand-By Commitments. The Portfolio may enter into put transactions,
including transactions sometimes referred to as stand-by commitments, with
respect to money market instruments in its portfolio. In these transactions, the
Portfolio would acquire the right to sell a security at an agreed upon price
within a specified period prior to its maturity date. These transactions involve
some risk to the Portfolio if the other party should default on its obligation
and the Portfolio is delayed or prevented from recovering the collateral or
completing the transaction. Acquisition of puts will have the effect of
increasing the cost of the securities subject to the put and thereby reducing
the yields otherwise available from such securities.
Convertible Securities. The Portfolio may invest up to 20% of its net
assets in convertible securities, which are securities generally offering fixed
interest or dividend yields which may be converted either at a stated price or
stated rate for common or preferred stock. Although to a lesser extent than with
fixed-income securities generally, the market value of convertible securities
tends to decline as interest rates increase, and increase as interest rates
decline. Because of the conversion feature, the market value of convertible
securities also tends to vary with fluctuations in the market value of the
underlying common or preferred stock.
Other Investment Companies. The Portfolio may invest up to 10% of its
total assets in shares of other investment companies, subject to applicable
regulatory limitations.
-8-
<PAGE>
STRIPS. The Portfolio may invest up to 20% of its total assets in
separately traded principal and interest components of securities backed by the
full faith and credit of the U.S. Government, including instruments known as
"STRIPS". The value of these instruments tends to fluctuate more in response to
changes in interest rates than the value of ordinary interest-paying debt
securities with similar maturities. The risk is greater when the period to
maturity is longer.
Derivatives and Related Instruments. The Portfolio may invest its assets
in derivative and related instruments to hedge various market risks or to
increase the Portfolio's income or gain. Some of these instruments will be
subject to asset segregation requirements to cover the Portfolio's obligations.
The Portfolio may (i) purchase, write and exercise call and put options on
securities and securities indexes (including using options in combination with
securities, other options or derivative instruments); (ii) enter into swaps,
futures contracts and options on futures contracts; (iii) employ forward
currency contracts; and (iv) purchase and sell structured products, which are
instruments designed to restructure or reflect the characteristics of certain
other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Portfolio invests may be particularly sensitive to changes in prevailing
economic conditions and market value. The ability of the Portfolio to
successfully utilize these instruments may depend in part upon the ability of
the Portfolio's advisers to forecast these factors correctly. Inaccurate
forecasts could expose the Portfolio to a risk of loss. There can be no
guarantee that there will be a correlation between price movements in a hedging
instrument and in the portfolio assets being hedged. The Portfolio is not
required to use any hedging strategies. Hedging strategies, while reducing risk
of loss, can also reduce the opportunity for gain. Derivatives transactions not
involving hedging may have speculative characteristics, involve leverage and
result in more risk to the Portfolio than hedging strategies using the same
instruments. There can be no assurance that a liquid market will exist at a time
when the Portfolio seeks to close out a derivatives position. Activities of
large traders in the futures and securities markets involving arbitrage,
"program trading," and other investment strategies may cause price distortions
in derivatives markets. In certain instances, particularly those involving
over-the-counter transactions or forward contracts, there is a greater potential
that a counterparty or broker may default. In the event of a default, the
Portfolio may experience a loss. For additional information concerning
derivatives, related instruments and the associated risks, see the SAI.
Portfolio Turnover. The frequency of the Portfolio's portfolio
transactions will vary from year to year. The Portfolio's investment policies
may lead to frequent changes in investments, particularly in periods of rapidly
changing market conditions. High portfolio turnover rates would generally result
in higher transaction costs, including brokerage commissions or dealer mark-ups,
and would make it more difficult for the Portfolio to qualify as a registered
investment company under federal tax law. See "How Distributions are Made; Tax
Information" and "Other Information Concerning the Fund -- Certain Regulatory
Matters."
Limiting Investment Risks
Specific investment restrictions help the Portfolio limit investment risks
for the Fund's shareholders. These restrictions prohibit the Portfolio from: (a)
with respect to 50% of its total assets, holding more than 10% of the voting
securities of any issuer; (b) investing more than 15% of its net assets in
illiquid securities (which include securities restricted as to resale unless
they are determined to be readily marketable in accordance with procedures
established by the Board of Trustees of the Portfolio); or (c) investing more
than 25% of its total assets in any one industry. A complete description of
these and other investment policies is included in the SAI. Except for
restriction (c) above and investment policies designated as fundamental in the
SAI, the investment policies of the Portfolio and the Fund (including their
investment objective) are not fundamental. Shareholder approval is not required
to change any non-fundamental investment policy. However, in the event of a
change in the Fund's or Portfolio's investment objective, shareholders will be
given at least 30 days' prior written notice.
Risk Factors
The Fund does not constitute a balanced or complete investment program,
and the net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities held by the Portfolio. The Portfolio is
subject to the general risks and considerations associated with equity
investing, as well as the risks discussed herein.
-9-
<PAGE>
Because the Portfolio is "non-diversified," the value of the Fund's shares
is more susceptible to developments affecting issuers in which the Portfolio
invests.
For a discussion of certain other risks associated with the Portfolio's
additional investment activities, see "Other Investment Practices" above.
MANAGEMENT
The Portfolio's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the
Portfolio pursuant to an Investment Advisory Agreement and has overall
responsibility for investment decisions of the Portfolio, subject to the
oversight of the Board of Trustees. Chase is a wholly-owned subsidiary of The
Chase Manhattan Corporation, a bank holding company. Chase and its predecessors
have over 100 years of money management experience. For its investment advisory
services to the Portfolio, Chase is entitled to receive an annual fee computed
daily and paid monthly based at an annual rate equal to 0.40% of the Portfolio's
average daily net assets. Chase is located at 270 Park Avenue, New York, New
York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Portfolio pursuant to a Sub-Investment
Advisory Agreement between CAM and Chase. CAM is a wholly-owned operating
subsidiary of Chase. CAM makes investment decisions for the Portfolio on a
day-to-day basis. For these services, CAM is entitled to receive a fee, payable
by Chase from its advisory fee, at an annual rate equal to 0.20% of the
Portfolio's average daily net assets. CAM was recently formed for the purpose of
providing discretionary investment advisory services to institutional clients
and to consolidate Chase's investment management function. The same individuals
who serve as portfolio managers for Chase also serve as portfolio managers for
CAM. CAM is located at 1211 Avenue of the Americas, New York, New York 10036.
Portfolio Manager. Dave Klassen, Director of Domestic Equity Management at
Chase, and Tony Gleason, Vice President of Chase, have been responsible for the
day-to-day management of the Portfolio since Sepetmber 1995. Mr. Klassen joined
Chase in March 1992 and, in addition to co-managing the Vista Capital Growth
Portfolio, is responsible for co-managing the Vista Small Cap Equity Fund and
the Vista Growth and Income Fund. Prior to joining Chase, Mr. Klassen was a vice
president and portfolio manager at Dean Witter Reynolds, responsible for
co-managing several mutual funds and other accounts. Mr. Gleason is also
responsible for managing the Vista Equity Income Fund. Mr. Gleason joined Chase
in 1995 with 10 years of investment experience.
ABOUT YOUR INVESTMENT
Alternative Sales Arrangements
Class A shares. An investor who purchases Class A shares pays a sales
charge at the time of purchase. As a result, Class A shares are not subject to
any sales charges when they are redeemed. Certain purchases of Class A shares
qualify for reduced sales charges. Class A shares have lower combined 12b-1 and
service fees than Class B shares. See "How to Buy, Sell and Exchange Shares" and
"Other Information Concerning the Fund."
-10-
<PAGE>
Class B shares. Class B shares are sold without an initial sales charge,
but are subject to a contingent deferred sales charge ("CDSC") if redeemed
within a specified period after purchase. Class B shares also have higher
combined 12b-1 and service fees than Class A shares.
Class B shares automatically convert into Class A shares, based on
relative net asset value, at the beginning of the ninth year after purchase.
For more information about the conversion of Class B shares, see the SAI. This
discussion will include information about how shares acquired through
reinvestment of distributions are treated for conversion purposes. Class B
shares provide an investor the benefit of putting all of the investor's dollars
to work from the time the investment is made. Until conversion, Class B shares
will have a higher expense ratio and pay lower dividends than Class A shares
because of the higher combined 12b-1 and service fees. See "How to Buy, Sell and
Exchange Shares" and "Other Information Concerning the Fund."
Which arrangement is best for you? The decision as to which class of
shares provides a more suitable investment for an investor depends on a number
of factors, including the amount and intended length of the investment.
Investors making investments that qualify for reduced sales charges might
consider Class A shares. Investors who prefer not to pay an initial sales charge
might consider Class B shares. In almost all cases, investors planning to
purchase $250,000 or more of the Fund's shares will pay lower aggregate charges
and expenses by purchasing Class A shares.
HOW TO BUY, SELL AND EXCHANGE SHARES
How to Buy Shares
You can open a Fund account with as little as $2,500 ($1,000 for IRAs,
SEP-IRAs and the Systematic Investment Plan) and make additional investments at
any time with as little as $100. You can buy Fund shares three ways--through an
investment representative, through the Fund's distributor by calling the Vista
Service Center, or through the Systematic Investment Plan.
All purchases made by check should be in U.S. dollars and made payable to
the Vista Funds. Third party checks, credit cards and cash will not be accepted.
The Fund reserves the right to reject any purchase order or cease offering
shares for purchase at any time. When purchases are made by check, redemptions
will not be allowed until clearance of the purchase check, which may take 15
calendar days or longer. In addition, the redemption of shares purchased through
ACH will not be allowed until clearance of your payment which may take 7
business days or longer.
Buying shares through the Fund's distributor. Complete and return the
enclosed application and your check in the amount you wish to invest to the
Vista Service Center.
Buying shares through systematic investing. You can make regular
investments of $100 or more per transaction through automatic periodic deduction
from your bank checking or savings account. Shareholders electing to start this
Systematic Investment Plan when opening an account should complete Section 8 of
the account application. Current shareholders may begin such a plan at any time
by sending a signed letter with signature guarantee and a deposit slip or voided
check to the Vista Service Center. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Shares are sold at the public offering price based on the net asset value
next determined after the Vista Service Center receives your order in proper
form. In most cases, in order to receive that day's public offering price, the
Vista Service Center must receive your order before the close of regular trading
on the New York Stock Exchange. If you buy shares through your investment
representative, the representative must receive your order before the close of
regular trading on the New York Stock Exchange to receive that day's public
offering price. Orders for shares are accepted by the Fund after funds are
converted to federal funds. Orders paid by check and received by 2:00 p.m.,
Eastern Time will generally be available for the purchase of shares the
following business day.
If you are considering redeeming or exchanging shares or transferring
shares to another person shortly after purchase, you should pay for those shares
with a certified check to avoid any delay in redemption, exchange or
-11-
<PAGE>
transfer. Otherwise the Fund may delay payment until the purchase price of
those shares has been collected or, if you redeem by telephone, until 15
calendar days after the purchase date. To eliminate the need for safekeeping,
the Fund will not issue certificates for your Class A shares unless you request
them. Due to the conversion feature of Class B shares, certificates for Class B
shares will not be issued and all Class B shares will be held in book entry
form.
Class A Shares
The public offering price of Class A shares is the net asset value plus a
sales charge that varies depending on the size of your purchase. The Fund
receives the net asset value. The sales charge is allocated between your
broker-dealer and the Fund's distributor as shown in the following table, except
when the Fund's distributor, in its discretion, allocates the entire amount to
your broker-dealer.
- -------------------------------------------------------------------------------
Sales charge as a Amount of sales charge
percentage of: reallowed to dealers as a
Amount of transaction at Offering Net amount percentage of offering price
offering price($) price invested
- -------------------------------------------------------------------------------
Under 100,000 4.75 4.99 4.00
- -------------------------------------------------------------------------------
100,000 but under 250,000 3.75 3.90 3.25
- -------------------------------------------------------------------------------
250,000 but under 500,000 2.50 2.56 2.25
- -------------------------------------------------------------------------------
500,000 but under 1,000,000 2.00 2.04 1.75
- -------------------------------------------------------------------------------
There is no initial sales charge on purchases of Class A shares of $1
million or more.
The Fund's distributor pays broker-dealers commissions on net sales of
Class A shares of $1 million or more based on an investor's cumulative
purchases. Such commissions are paid at the rate of 1.00% of the amount under
$2.5 million, 0.75% of the next $7.5 million, 0.50% of the next $40 million and
0.20% thereafter. The Fund's distributor may withhold such payments with respect
to short-term investments.
Class B Shares
Class B shares are sold without an initial sales charge, although a CDSC
will be imposed if you redeem shares within a specified period after purchase,
as shown in the table below. The following types of shares may be redeemed
without charge at any time: (i) shares acquired by reinvestment of distributions
and (ii) shares otherwise exempt from the CDSC, as described below. For other
shares, the amount of the charge is determined as a percentage of the lesser of
the current market value or the purchase price of shares being redeemed.
Year 1 2 3 4 5 6 7 8+
-----------------------------------------------------------
CDSC 5% 4% 3% 3% 2% 1% 0% 0%
In determining whether a CDSC is payable on any redemption, the Fund will
first redeem shares not subject to any charge, and then shares held longest
during the CDSC period. When a share that has appreciated in value is redeemed
during the CDSC period, a CDSC is assessed only on its initial purchase price.
For information on how sales charges are calculated if you exchange your shares,
see "How
-12-
<PAGE>
to Exchange Your Shares." The Fund's distributor pays broker-dealers a
commission of 4.00% of the offering price on sales of Class B share, and the
distributor receives the entire amount of any CDSC you pay.
General
You may be eligible to buy Class A shares at reduced sales charges.
Consult your investment representative or the Vista Service Center for details
about Vista's combined purchase privilege, cumulative quantity discount,
statement of intention, group sales plan, employee benefit plans, and other
plans. Descriptions are also included in the enclosed application and in the
SAI. In addition, sales charges will not apply to shares purchased with
redemption proceeds received within the prior ninety days from non-Vista mutual
funds on which the investor paid a front-end or contingent deferred sales
charge.
A participant-directed employee benefit plan participating in a
"multi-fund" program approved by the Board of Trustees may include amounts
invested in the other mutual funds participating in such program for purposes of
determining whether the plan may purchase Class A shares at net asset value.
These investments will also be included for purposes of the discount privileges
and programs described above.
The Fund may sell Class A shares at net asset value without an initial
sales charge to the current and retired Trustees (and their immediate families),
current and retired employees (and their immediate families) of Chase, the
Fund's distributor and transfer agent or any affiliates or subsidiaries thereof,
registered representatives and other employees (and their immediate families) of
broker-dealers having selected dealer agreements with the Fund's distributor,
employees (and their immediate families) of financial institutions having
selected dealer agreements with the Fund's distributor (or otherwise having an
arrangement with a broker-dealer or financial institution with respect to sales
of Vista fund shares) financial institution trust departments investing an
aggregate of $1 million or more in the Vista Family of Funds and clients of
certain administrators of tax-qualified plans when proceeds from repayments of
loans to participants are invested (or reinvested) in the Vista Family of Funds.
No initial sales charge will apply to the purchase of Class A shares of
the Fund by an investor seeking to invest the proceeds of a qualified retirement
plan where a portion of the plan was invested in the Vista Family of Funds, any
qualified retirement plan with 50 or more participants, or an individual
participant in a tax-qualified plan making a tax-free rollover or transfer of
assets from the plan in which Chase or an affiliate serves as trustee or
custodian of the plan or manages some portion of the plan's assets.
Purchases of Class A shares of the Fund may be made with no initial sales
charge through an investment adviser or financial planner that charges a fee for
its services. Purchases of Class A shares of the Fund may be made with no
initial sales charge (i) by an investment adviser, broker or financial planner,
provided arrangements are preapproved and purchases are placed through an
omnibus account with the Fund or (ii) by clients of such investment adviser or
financial planner who place trades for their own accounts, if such accounts are
linked to a master account of such investment adviser or financial planner on
the books and records of the broker or agent. Such purchases may be made for
retirement and deferred compensation plans and trusts used to fund those plans.
Purchases of Class A shares of the Fund may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary exercising investment discretion, provided that
appropriate notification of such fiduciary relationship is reported at the time
of the investment to the Fund, the Fund's distributor or the Vista Service
Center.
Shareholders of record of any Vista fund as of November 30, 1990 and
certain immediate family members may purchase Class A shares of the Fund with no
initial sales charge for as long as they continue to own Class A shares of any
Vista fund, provided there is no change in account registration. Shareholders of
record of any portfolio of The Hanover Funds, Inc. or The Hanover Investment
Funds, Inc. as of May 3, 1996 and certain related investors may purchase Class A
shares of the Fund with no initial sales charge for as long as they continue to
own shares of any Vista fund following this date, provided there is no change in
account registration.
The Fund may sell Class A shares at net asset value without an initial
sales charge in connection with the acquisition by the Fund of assets of an
investment company or personal holding company. The CDSC
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will be waived on redemption of Class B shares arising out of death or
disability or in connection with certain withdrawals from IRA or other
retirement plans. Up to 12% of the value of Class B shares subject to a
systematic withdrawal plan may also be redeemed each year without a CDSC,
provided that the Class B account had a minimum balance of $20,000 at the time
the systematic withdrawal plan was established. The SAI contains additional
information about purchasing the Fund's shares at reduced sales charges.
The Fund reserves the right to change any of these policies on
purchases without an initial sales charge at any time and may reject any such
purchase request.
Shareholders of other Vista funds may be entitled to exchange their
shares for, or reinvest distributions from their funds in, shares of the Fund at
net asset value.
How to Sell Shares
You can sell your shares to the Fund any day the New York Stock Exchange
is open, either directly to the Fund or through your investment representative.
The Fund will only forward redemption payments on shares for which it has
collected payment of the purchase price.
Selling shares directly to the Fund. Send a signed letter of
instruction to the Vista Service Center, along with any certificates that
represent shares you want to sell. The price you will receive is the next net
asset value calculated after the Fund receives your request in proper form, less
any applicable CDSC. In order to receive that day's net asset value, the Vista
Service Center must receive your request before the close of regular trading on
the New York Stock Exchange.
If you sell shares having a net asset value of $100,000 or more, the
signatures of registered owners or their legal representatives must be
guaranteed by a bank, broker-dealer or certain other financial institutions.
See the SAI for more information about where to obtain a signature guarantee.
If you want your redemption proceeds sent to an address other than your
address as it appears on Vista's records, a signature guarantee is required. The
Fund may require additional documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Vista Service Center for details.
The Fund generally sends you payment for your shares the business day
after your request is received, assuming the Fund has collected payment of the
purchase price of your shares. Under unusual circumstances, the Fund may suspend
redemptions, or postpone payment for more than seven days, as permitted by
federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.
The Vista Service Center will employ these and other reasonable
procedures to confirm that instructions communicated by telephone are genuine;
if it fails to employ reasonable procedures, the Fund may be liable for any
losses due to unauthorized or fraudulent instructions. An investor agrees,
however, that to the extent permitted by applicable law, neither the Fund nor
its agents will be liable for any loss, liability, cost or expense arising out
of any redemption request, including any fraudulent or unauthorized request. For
information, consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you
may experience delays in contacting the Vista Service Center by telephone. In
this event, you may wish to submit a written redemption request, as described
above, or contact your investment representative. The Telephone Redemption
Privilege is not available if you were issued certificates for shares that
remain outstanding. The Telephone Redemption Privilege may be modified or
terminated without notice.
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Systematic withdrawal. You can make regular withdrawals of $50 or more
($100 or more for Class B accounts) monthly, quarterly or semiannually. A
minimum account balance of $5,000 is required to establish a systematic
withdrawal plan for Class A accounts. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Selling shares through your investment representative. Your investment
representative must receive your request before the close of regular trading on
the New York Stock Exchange to receive that day's net asset value. Your
investment representative will be responsible for furnishing all necessary
documentation to the Vista Service Center, and may charge you for its services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem
your shares if at such time the aggregate net asset value of the shares in your
account is less than $500 or if you purchase through the Systematic Investment
Plan and fail to meet the Fund's investment minimum within a twelve month
period. In the event of any such redemption, you will receive at least 60 days
notice prior to the redemption. In the event the Fund redeems Class B shares
pursuant to this provision, no CDSC will be imposed.
How to Exchange Your Shares
You can exchange your shares for shares of the same class of certain
other Vista funds at net asset value beginning 15 days after purchase. Not all
Vista funds offer all classes of shares. The prospectus of the other Vista fund
into which shares are being exchanged should be read carefully and retained for
future reference. If you exchange shares subject to a CDSC, the transaction will
not be subject to the CDSC. However, when you redeem the shares acquired through
the exchange, the redemption may be subject to the CDSC, depending upon when you
originally purchased the shares. The CDSC will be computed using the schedule of
any fund into or from which you have exchanged your shares that would result in
your paying the highest CDSC applicable to your class of shares. In computing
the CDSC, the length of time you have owned your shares will be measured from
the date of original purchase and will not be affected by any exchange.
An exchange of Class B shares into any of the Vista money market funds
other than the Class B shares of the Vista Prime Money Market Fund will be
treated as a redemption -- and therefore subject to the conditions of the CDSC
- -- and a subsequent purchase. Class B shares of any Vista non-money market fund
may be exchanged into the Class B shares of the Vista Prime Money Market Fund in
order to continue the aging of the initial purchase of such shares.
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the amount or
number of exchanges or reject any exchange. In addition, any shareholder who
makes more than ten exchanges of shares involving the Fund in a year or three
in a calendar quarter will be charged a $5.00 administration fee for each such
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult the Vista Service Center before requesting an exchange.
See the SAI to find out more about the exchange privilege.
Reinstatement privilege. Class A shareholders have a one time privilege
of reinstating their investment in the Fund at net asset value next determined
subject to written request within 90 calendar days of the
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redemption, accompanied by payment for the shares (not in excess of the
redemption). Class B shareholders who have redeemed their shares and paid a CDSC
with such redemption may purchase Class A shares with no initial sales charge
(in an amount not in excess of their redemption proceeds) if the purchase occurs
within 90 days of the redemption of the Class B shares.
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined
once daily based upon prices determined as of the close of regular trading on
the New York Stock Exchange (normally 4:00 p.m., Eastern time, however, options
are priced at 4:15 p.m., Eastern time), on each business day of the Fund, by
dividing the net assets of the Fund attributable to that class by the total
number of outstanding shares of that class. Values of assets held by the Fund
(i.e., the value of its investment in the Portfolio and its other assets) are
determined on the basis of their market or other fair value, as described in the
SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund distributes any net investment income at least semi-annually
and any net realized capital gains at least annually. Distributions from capital
gains are made after applying any available capital loss carryovers.
Distributions paid by the Fund with respect to Class A shares will generally be
greater than those paid with respect to Class B shares because expenses
attributable to Class B shares will generally be higher.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares without a sales charge; (2) receive
distributions from net investment income in cash or by ACH to a pre-established
bank account while reinvesting capital gains distributions in additional shares
without a sales charge; or (3) receive all distributions in cash or by ACH. You
can change your distribution option by notifying the Vista Service Center in
writing. If you do not select an option when you open your account, all
distributions will be reinvested. All distributions not paid in cash or by ACH
will be reinvested in shares of the class on which the distributions are paid.
You will receive a statement confirming reinvestment of distributions in
additional Fund shares promptly following the quarter in which the reinvestment
occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
All Fund distributions will be taxable to you as ordinary income,
except that any distributions of net long-term capital gains will be taxable as
such, regardless of how long you have held the shares. Distributions will be
taxable as described above whether received in cash or in shares through the
reinvestment of distributions.
Investors should be careful to consider the tax implications of
purchasing shares just prior to the next distribution date. Those investors
purchasing shares just prior to a distribution will be taxed on the entire
amount of the distribution received, even though the net asset value per share
on the date of such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and
tax status of distributions paid to you by the Fund for the preceding year.
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The foregoing is a summary of certain federal income tax consequences
of investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Distribution Plans
The Fund's distributor is Vista Fund Distributors, Inc. ("VFD"). VFD is a
subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase. The Trust
has adopted Rule 12b-1 distribution plans for Class A and Class B shares which
provide that the Fund will pay distribution fees at annual rates of up to 0.25%
and 0.75% of the average daily net assets attributable to Class A and Class B
shares of the Fund, respectively. Payments under the distribution plans shall be
used to compensate or reimburse the Fund's distributor and broker-dealers for
services provided and expenses incurred in connection with the sale of Class A
and Class B shares, and are not tied to the amount of actual expenses incurred.
Payments may be used to compensate broker-dealers with trail or maintenance
commissions at an annual rate of up to 0.20% of the average daily net asset
value of Class A shares, or 0.25% of the average daily net asset value of the
Class B shares maintained in the Fund by customers of these broker-dealers.
Trail or maintenance commissions are paid to broker-dealers beginning the 13th
month following the purchase of shares by their customers. Some activities
intended to promote the sale of Class A and Class B shares will be conducted
generally by the Vista Family of Funds, and activities intended to promote the
Fund's Class A or Class B shares may also benefit the Fund's other shares and
other Vista funds.
Class A shares are also permitted to pay an additional fee at an annual
rate of up to 0.05% of its average daily net asset value in anticipation of, or
as reimbursement for, expenses incurred in connection with print or electronic
media advertising in connection with the sale of Fund shares. When such expenses
are incurred, the maximum compensation paid by the Class A shares under the
Class A distribution plan would be at an annual rate of 0.25% of its average
daily net asset value.
VFD may provide promotional incentives to broker-dealers that meet
specified sales targets for one or more Vista funds. These incentives may
include gifts of up to $100 per person annually; an occasional meal, ticket to a
sporting event or theater for entertainment for broker-dealers and their guests;
and payment for travel expenses, including lodging and meals, in connection with
attendance at training and educational meetings within and outside the U.S.
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with
certain shareholder servicing agents (including Chase) under which the
shareholder servicing agents have agreed to provide certain support services to
their customers who beneficially own Class A or Class B shares of the Fund.
These services include assisting with purchase and redemption transactions,
maintaining shareholder accounts and records, furnishing customer statements,
transmitting shareholder reports and communications to customers and other
similar shareholder liaison services. For performing these services, each
shareholder servicing agent receives an annual fee of up to 0.25% of the average
daily net assets of Class A and Class B shares of the Fund held by investors for
whom the shareholder servicing agent maintains a servicing relationship.
Shareholder servicing agents may subcontract with other parties for the
provision of shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are
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already receiving other fees an amount not exceeding such other fees or the fees
for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation
to certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator and Sub-Administrator
Chase acts as the administrator for the Fund and the Portfolio and is
entitled to receive from each of the Fund and the Portfolio a fee computed daily
and paid monthly at an annual rate equal to 0.05% of their average daily net
assets.
VFD provides certain sub-administrative services to the Fund pursuant to a
distribution and sub-administration agreement and is entitled to receive a fee
for these services from the Fund at an annual rate equal to 0.05% of the Fund's
average daily net assets. VFD has agreed to use a portion of this fee to pay for
certain expenses incurred in connection with organizing new series of the Trust
and certain other ongoing expenses of the Trust. VFD is located at 101 Park
Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its
pro rata share of expenses of the Trust. These expenses include investment
advisory and administrative fees; the compensation of the Trustees; registration
fees; interest charges; taxes; expenses connected with the execution, recording
and settlement of security transactions; fees and expenses of the Fund's
custodian for all services to the Fund, including safekeeping of funds and
securities and maintaining required books and accounts; expenses of preparing
and mailing reports to investors and to government offices and commissions;
expenses of meetings of investors; fees and expenses of independent accountants,
of legal counsel and of any transfer agent, registrar or dividend disbursing
agent of the Trust; insurance premiums; and expenses of calculating the net
asset value of, and the net income on, shares of the Fund. Shareholder servicing
and distribution fees are allocated to specific classes of the Fund. In
addition, the Fund may allocate transfer agency and certain other expenses by
class. Service providers to the Fund may, from time to time, voluntarily waive
all or a portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Shares have no
preemptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of the Fund generally vote
together except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class.
The Fund issues multiple classes of shares. This Prospectus relates
only to Class A and Class B shares of the Fund. The Fund offers other classes of
shares in addition to these classes. The categories of investors that are
eligible to purchase shares and minimum investment requirements may differ for
each class of Fund shares. In addition, other classes of Fund shares may be
subject to differences in sales charge arrangements, ongoing
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distribution and service fee levels, and levels of certain other expenses, which
will affect the relative performance of the different classes. Investors may
call 1-800-34-VISTA to obtain additional information about other classes of
shares of the Fund that are offered. Any person entitled to receive compensation
for selling or servicing shares of the Fund may receive different levels of
compensation with respect to one class of shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may,
under certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Unique Characteristics of Master/Feeder Fund Structure
Unlike other mutual funds which directly acquire and manage their own
portfolio securities, the Fund invests all of its investable assets in the
Portfolio, a separate registered investment company. Therefore, a shareholder's
interest in the Portfolio's securities is indirect. In addition to selling a
beneficial interest to the Fund, the Portfolio may sell beneficial interests to
other mutual funds or institutional investors. Such investors will invest in the
Portfolio on the same terms and conditions and will pay a proportionate share of
the Portfolio's expenses. However, other investors investing in the Portfolio
are not required to sell their shares at the same public offering prices as the
Fund, and may bear different levels of ongoing expenses than the Fund.
Shareholders of the Fund should be aware that these differences may result in
differences in returns experienced in the different funds that invest in the
Portfolio. Such differences in returns are also present in other mutual fund
structures.
Smaller funds investing in the Portfolio may be materially affected by
the actions of larger funds investing in the Portfolio. For example, if a large
fund withdraws from the Portfolio, the remaining funds may experience higher pro
rata operating expenses, thereby producing lower returns. Additionally, the
Portfolio may become less diverse, resulting in increased portfolio risk.
However, this possibility also exists for traditionally structured funds which
have large or institutional investors. Funds with a greater pro rata ownership
in the Portfolio could have effective voting control of the operations of the
Portfolio. Whenever the Trust is requested to vote on matters pertaining to the
Portfolio, the Trust will hold a meeting of shareholders of the Fund and will
cast all of its votes in the same proportion as do the Fund's shareholders.
Shares of the Fund for which no voting instructions have been received will be
voted in the same proportion as those shares for which voting instructions are
received. Certain changes in the Portfolio's objective, policies or restrictions
may require the Trust to withdraw the Fund's interest in the Portfolio. Any
withdrawal could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution from the Portfolio). The Fund could incur
brokerage fees or other transaction costs in converting such securities to cash.
In addition, a distribution in kind may result in a less diversified portfolio
of investments or adversely affect the liquidity of the Fund.
State securities regulations generally do not permit the same
individuals who are disinterested Trustees of the Trust to be Trustees of the
Portfolio absent the adoption of written procedures by a majority of the
disinterested Trustees of the Trust reasonably appropriate to deal with
potential conflicts of interest up to and including creating a separate Board of
Trustees. The Trustees of the Trust, including a majority of the disinterested
Trustees, have adopted procedures they believe are reasonably appropriate to
deal with any conflict of interest up to and including creating a separate Board
of Trustees.
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Investors in the Fund may obtain information about whether an
investment in the Portfolio may be available through other funds by calling the
Vista Service Center at 1-800-34-VISTA.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently
interpreted, prohibit bank holding companies and their affiliates from
sponsoring, organizing, controlling, or distributing shares of, mutual funds,
and generally prohibit banks from issuing, underwriting, selling or distributing
securities. These laws do not prohibit banks or their affiliates from acting as
investment adviser, administrator or custodian to mutual funds or from
purchasing mutual fund shares as agent for a customer. Chase and the Trust
believe that Chase (including its affiliates) may perform the services to be
performed by it as described in this Prospectus without violating such laws. If
future changes in these laws or interpretations required Chase to alter or
discontinue any of these services, it is expected that the Board of Trustees
would recommend alternative arrangements and that investors would not suffer
adverse financial consequences. State securities laws may differ from the
interpretations of banking law described above and banks may be required to
register as dealers pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income calculated pursuant to federal rules per share
during a recent 30-day period by the maximum public offering price per share of
such class on the last day of that period.
"Total return" for the one-, five- and ten-year periods (or for the
life of a class, if shorter) through the most recent calendar quarter represents
the average annual compounded rate of return on an investment of $1,000 in the
Fund invested at the maximum public offering price (in the case of Class A
shares) or reflecting the deduction of any applicable contingent deferred sales
charge (in the case of Class B shares). Total return may also be presented for
other periods or without reflecting sales charges. Any quotation of investment
performance not reflecting the maximum initial sales charge or contingent
deferred sales charge would be reduced if such sales charges were used.
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All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other mutual
funds and other investment vehicles. Quotation of investment performance for any
period when a fee waiver or expense limitation was in effect will be greater
than if the waiver or limitation had not been in effect. The Fund's performance
may be compared to other mutual funds, relevant indices and rankings prepared by
independent services. See the SAI.
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MAKE THE MOST OF YOUR VISTA PRIVILEGES
The following services are available to you as a Vista mutual fund shareholder.
o SYSTEMATIC INVESTMENT PLAN - Invest as much as you wish ($100 or more)
in the first or third week of any month. The amount will be
automatically transferred from your checking or savings account.
o SYSTEMATIC WITHDRAWAL - Make regular withdrawals of $50 or more ($100
or more for Class B accounts) monthly, quarterly or seminannually. A
minimum account balance of $5,000 is required to establish a
systematic withdrawal plan for Class A accounts.
o SYSTEMATIC EXCHANGE - Transfer assets automatically from one Vista
account to another on a regular, prearranged basis. There is no
additional charge for this service.
o FREE EXCHANGE PRIVILEGE - Exchange money between Vista funds in the
same class of shares without charge. The exchange privilege allows you
to adjust your investments as your objectives change.
Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange and systematic withdrawal or exchange.
o REINSTATEMENT PRIVILEGE - Class A shareholders have a one time
privilege of reinstating their investment in the Fund at net asset
value next determined subject to written request within 90 calendar
days of the redemption, accompanied by payment for the shares (not in
excess of the redemption).
Class B shareholders who have redeemed their shares and paid a CDSC
with such redemption may purchase Class A shares with no initial sales
charge (in an amount not in excess of their redemption proceeds) if the
purchase occurs within 90 days of the redemption of the Class B shares.
For more information about any of these services and privileges, call your
shareholder servicing agent, investment representative or the Vista Service
Center at 1-800-34-VISTA. These privileges are subject to change or termination.
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VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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PROSPECTUS
VISTA[SM] CAPITAL GROWTH FUND
Institutional Shares
May 6, 1996
Investment Strategy: Capital Growth
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-622-4273. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
The Fund, unlike many other investment companies which directly acquire
and manage their own portfolios of securities, seeks its investment objective by
investing all of its investable assets in Capital Growth Portfolio (the
"Portfolio"), an open-end management investment company with an investment
objective identical to those of the Fund. Investors should carefully consider
this investment approach. For additional information regarding this investment
structure, see "Unique Characteristics of Master/Feeder Fund Investment
Structure" on page 12.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary........................................................
Fund Objective.........................................................
Investment Policies....................................................
Management.............................................................
How to Purchase, Redeem and Exchange Shares............................
How the Fund Values its Shares.........................................
How Distributions are Made; Tax Information............................
Other Information Concerning the Fund..................................
Performance Information................................................
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EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the Fund based on
expenses incurred in the most recent fiscal year. The example shows the
cumulative expenses attributable to a hypothetical $1,000 investment over
specified periods.
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee.......................................... 0.40%
12b-1 Fee........................................................ None
Shareholder Servicing Fee........................................ 0.25%
Other Expenses................................................... 0.35%
-----
Total Fund Operating Expenses.................................... 1.00%
=====
Example
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Year 5 Years 10 Years
------ ------ ------- --------
Institutional Shares..... $10 $32 $55 $122
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
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FUND OBJECTIVE
Vista Capital Growth Fund seeks long-term capital growth. The Fund is not
intended to be a complete investment program, and there is no assurance it will
achieve its objective.
INVESTMENT POLICIES
Investment Approach
The Fund seeks to achieve its objective by investing all of its
investable assets in the Portfolio. The Portfolio will invest primarily in a
broad portfolio of common stocks. Under normal market conditions, the Portfolio
will invest at least 80% of its total assets in common stocks. The Portfolio
will seek to invest in stocks of companies with capitalizations of $750 million
to $4.0 billion. Current income, if any, is a consideration incidental to the
Portfolio's objective of long-term capital growth. The Portfolio's advisers
intend to utilize both quantitative and fundamental research to identify
undervalued stocks with a catalyst for positive change.
The Portfolio is classified as a "non-diversified" fund under federal
securities law. The Portfolio's assets may be more concentrated in the
securities of any single issuer or group of issuers than if the Portfolio were
diversified.
The Portfolio may invest any portion of its assets not invested in common
stocks in high quality money market instruments and repurchase agreements, as
described below. For temporary defensive purposes, the Portfolio may invest
without limitation in these instruments. To the extent that the Portfolio
departs from its investment policies during temporary defensive periods, the
Fund's investment objective may not be achieved.
Fund Structure
The Portfolio has an objective identical to that of the Fund. The Fund may
withdraw its investment from the Portfolio at any time if the Trustees determine
that it is in the best interest of the Fund to do so. Upon any such withdrawal,
the Trustees would consider what action might be taken, including investing all
of the Fund's investable assets in another pooled investment entity having
substantially the same objective and policies as the Fund or retaining an
investment adviser to manage the Fund's assets directly.
Other Investment Practices
The Portfolio may also engage in the following investment practices, when
consistent with the Portfolio's overall objective and policies. These practices,
and certain associated risks, are more fully described in the SAI.
Foreign Securities. The Portfolio may invest up to 20% of its total assets
in foreign securities, including Depositary Receipts. Since foreign securities
are normally denominated and traded in foreign currencies, the values of the
Portfolio's foreign investments may be affected favorably or unfavorably by
currency exchange rates and exchange control regulations. There may be less
information publicly available about foreign companies than U.S. companies, and
they are not generally subject to accounting, auditing and financial reporting
standards and practices comparable to those in the U.S. The securities of
foreign companies may be less liquid and more volatile than the securities of
comparable U.S. companies. Foreign settlement procedures and trade regulations
may involve certain risks (such as delay in payment or delivery of securities or
in the recovery of the Portfolio's assets held abroad) and expenses. It is
possible that nationalization or expropriation of assets, imposition of currency
exchange controls, confiscatory taxation, political or financial instability and
diplomatic developments could affect the value of the Portfolio's investments in
certain foreign countries. Foreign laws may restrict the ability to invest in
certain countries or issuers and special tax considerations will apply to
foreign securities. The risks can increase if the Portfolio invests in
securities of issuers in emerging markets.
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The Portfolio may invest its assets in securities of foreign issuers in
the form of American Depositary Receipts, European Depositary Receipts, Global
Depositary Receipts or other similar securities representing securities of
foreign issuers (collectively, "Depositary Receipts"). The Portfolio treats
Depositary Receipts as interests in the underlying securities for purposes of
its investment policies. The Portfolio will limit its investment in Depositary
Receipts not sponsored by the issuer of the underlying securities to no more
than 5% of the value of its net assets (at the time of investment).
Money Market Instruments. The Portfolio may invest in cash or
high-quality, short-term money market instruments. Such instruments may include
U.S. Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Repurchase Agreements, Securities Loans and Forward Commitments. The
Portfolio may enter into agreements to purchase and resell securities at an
agreed-upon price and time. The Portfolio also has the ability to lend portfolio
securities in an amount equal to not more than 30% of its total assets to
generate additional income. These transactions must be fully collateralized at
all times. The Portfolio may purchase securities for delivery at a future date,
which may increase its overall investment exposure and involves a risk of loss
if the value of the securities declines prior to the settlement date. These
transactions involve some risk to the Portfolio if the other party should
default on its obligation and the Portfolio is delayed or prevented from
recovering the collateral or completing the transaction.
Borrowings and Reverse Repurchase Agreements. The Portfolio may borrow
money from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Portfolio may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Portfolio enters into a reverse repurchase agreement,
it will establish a segregated account in which it will maintain liquid assets
on a daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Portfolio would be required to pay interest on amounts
obtained through reverse repurchase agreements, which are considered borrowings
under federal securities laws.
Stand-By Commitments. The Portfolio may enter into put transactions,
including transactions sometimes referred to as stand-by commitments, with
respect to money market instruments in its portfolio. In these transactions, the
Portfolio would acquire the right to sell a security at an agreed upon price
within a specified period prior to its maturity date. These transactions involve
some risk to the Portfolio if the other party should default on its obligation
and the Portfolio is delayed or prevented from recovering the collateral or
completing the transaction. Acquisition of puts will have the effect of
increasing the cost of the securities subject to the put and thereby reducing
the yields otherwise available from such securities.
Convertible Securities. The Portfolio may invest up to 20% of its net
assets in convertible securities, which are securities generally offering fixed
interest or dividend yields which may be converted either at a stated price or
stated rate for common or preferred stock. Although to a lesser extent than with
fixed-income securities generally, the market value of convertible securities
tends to decline as interest rates increase, and increase as interest rates
decline. Because of the conversion feature, the market value of convertible
securities also tends to vary with fluctuations in the market value of the
underlying common or preferred stock.
Other Investment Companies. The Portfolio may invest up to 10% of its
total assets in shares of other investment companies, subject to applicable
regulatory limitations.
STRIPS. The Portfolio may invest up to 20% of its total assets in
separately traded principal and interest components of securities backed by the
full faith and credit of the U.S. Government, including instruments known as
"STRIPS". The value of these instruments tends to fluctuate more in response to
changes in interest rates than the value of ordinary interest-paying debt
securities with similar maturities. The risk is greater when the period to
maturity is longer.
Derivatives and Related Instruments. The Portfolio may invest its assets
in derivative and related instruments to hedge various market risks or to
increase the Portfolio's income or gain. Some of these instruments
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will be subject to asset segregation requirements to cover the Portfolio's
obligations. The Portfolio may (i) purchase, write and exercise call and put
options on securities and securities indexes (including using options in
combination with securities, other options or derivative instruments); (ii)
enter into swaps, futures contracts and options on futures contracts; (iii)
employ forward currency contracts; and (iv) purchase and sell structured
products, which are instruments designed to restructure or reflect the
characteristics of certain other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Portfolio invests may be particularly sensitive to changes in prevailing
economic conditions and market value. The ability of the Portfolio to
successfully utilize these instruments may depend in part upon the ability of
the Portfolio's advisers to forecast these factors correctly. Inaccurate
forecasts could expose the Portfolio to a risk of loss. There can be no
guarantee that there will be a correlation between price movements in a hedging
instrument and in the portfolio assets being hedged. The Portfolio is not
required to use any hedging strategies. Hedging strategies, while reducing risk
of loss, can also reduce the opportunity for gain. Derivatives transactions not
involving hedging may have speculative characteristics, involve leverage and
result in more risk to the Portfolio than hedging strategies using the same
instruments. There can be no assurance that a liquid market will exist at a time
when the Portfolio seeks to close out a derivatives position. Activities of
large traders in the futures and securities markets involving arbitrage,
"program trading," and other investment strategies may cause price distortions
in derivatives markets. In certain instances, particularly those involving
over-the-counter transactions or forward contracts, there is a greater potential
that a counterparty or broker may default. In the event of a default, the
Portfolio may experience a loss. For additional information concerning
derivatives, related instruments and the associated risks, see the SAI.
Portfolio Turnover. The frequency of the Portfolio's portfolio
transactions will vary from year to year. The Portfolio's investment policies
may lead to frequent changes in investments, particularly in periods of rapidly
changing market conditions. High portfolio turnover rates would generally result
in higher transaction costs, including brokerage commissions or dealer mark-ups,
and would make it more difficult for the Portfolio to qualify as a registered
investment company under federal tax law. See "How Distributions are Made; Tax
Information" and "Other Information Concerning the Fund -- Certain Regulatory
Matters."
Limiting Investment Risks
Specific investment restrictions help the Portfolio limit investment risks
for the Fund's shareholders. These restrictions prohibit the Portfolio from: (a)
with respect to 50% of its total assets, holding more than 10% of the voting
securities of any issuer; (b) investing more than 15% of its net assets in
illiquid securities (which include securities restricted as to resale unless
they are determined to be readily marketable in accordance with procedures
established by the Board of Trustees of the Portfolio); or (c) investing more
than 25% of its total assets in any one industry. A complete description of
these and other investment policies is included in the SAI. Except for
restriction (c) above and investment policies designated as fundamental in the
SAI, the investment policies of the Portfolio and the Fund (including their
investment objective) are not fundamental. Shareholder approval is not required
to change any non-fundamental investment policy. However, in the event of a
change in the Fund's or Portfolio's investment objective, shareholders will be
given at least 30 days' prior written notice.
Risk Factors
The Fund does not constitute a balanced or complete investment program,
and the next asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities held by the Portfolio. The Portfolio is
subject to the general risks and considerations associated with equity
investing, as well as the risks discussed herein.
Because the Fund is "non-diversified," the value of the Fund's shares is
more susceptible to developments affecting issuers in which the Fund invests.
For a discussion of certain other risks associated with the Portfolio's
additional investment activities, see "Other Investment Practices" above.
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<PAGE>
MANAGEMENT
The Portfolio's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the
Portfolio pursuant to an Investment Advisory Agreement and has overall
responsibility for investment decisions of the Portfolio, subject to the
oversight of the Board of Trustees. Chase is a wholly-owned subsidiary of The
Chase Manhattan Corporation, a bank holding company. Chase and its predecessors
have over 100 years of money management experience. For its investment advisory
services to the Portfolio, Chase is entitled to receive an annual fee computed
daily and paid monthly based at an annual rate equal to 0.40% of the Portfolio's
average daily net assets. Chase is located at 270 Park Avenue, New York, New
York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Portfolio pursuant to a Sub-Investment
Advisory Agreement between CAM and Chase. CAM is a wholly-owned operating
subsidiary of Chase. CAM makes investment decisions for the Portfolio on a
day-to-day basis. For these services, CAM is entitled to receive a fee, payable
by Chase from its advisory fee, at an annual rate equal to 0.20% of the
Portfolio's average daily net assets. CAM was recently formed for the purpose of
providing discretionary investment advisory services to institutional clients
and to consolidate Chase's investment management function. The same individuals
who serve as portfolio managers for Chase also serve as portfolio managers for
CAM. CAM is located at 1211 Avenue of the Americas, New York, New York 10036.
Portfolio Manager. Dave Klassen, Director of Domestic Equity Management
at Chase, and Tony Gleason, Vice President of Chase, have been responsible for
the day-to-day management of the Portfolio since March 1995. Mr. Klassen joined
Chase in March 1992 and, in addition to co-managing the Vista Capital Growth
Portfolio, is responsible for co-managing the Vista Small Cap Equity Fund and
the Vista Growth and Income Fund. Prior to joining Chase, Mr. Klassen was a vice
president and portfolio manager at Dean Witter Reynolds, responsible for
managing several mutual funds and other accounts. Mr. Gleason is also
responsible for managing the Vista Equity Income Fund. Mr. Gleason joined Chase
in 1995 with 10 years of investment experience.
HOW TO PURCHASE, REDEEM AND EXCHANGE SHARES
How to Purchase Shares
Institutional Shares may be purchased through selected financial service
firms, such as broker-dealer firms and banks ("Dealers") who have entered into a
selected dealer agreement with the Fund's distributor on each business day
during which the New York Stock Exchange is open for trading ("Fund Business
Day"). Qualified investors are defined as institutions, trusts, partnerships,
corporations, qualified and other retirement plans and fiduciary accounts opened
by a bank, trust company or thrift institution which exercises investment
authority over such accounts. The Fund reserves the right to reject any purchase
order or cease offering shares for purchase at any time.
Institutional Shares are sold at their public offering price, which is
their next determined net asset value. Orders received by Dealers in proper form
prior to the New York Stock Exchange closing time are confirmed at that day's
offering price, provided the order is received by the Vista Service Center prior
to its close of business. Dealers are responsible for forwarding orders for the
purchase of shares on a timely basis. Fund shares normally will be maintained in
book entry form and share certificates will be issued only upon request.
Management reserves the right to refuse to sell shares of the Fund to any
institution.
Federal regulations require that each investor provide a certified
Taxpayer Identification Number upon opening an account.
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Minimum Investments
The Fund has established a minimum initial investment amount of $1,000,000
for the purchase of Institutional Shares. There is no minimum for subsequent
investments. Purchases of Institutional Shares offered by other non-money market
Vista funds may be aggregated with purchases of Institutional Shares of the Fund
to meet the $1,000,000 minimum initial investment amount requirement.
How to Redeem Shares
You may redeem all or any portion of the shares in your account at any
time at the net asset value next determined after a redemption request in proper
form is furnished by you to your Dealer and transmitted to and received by the
Vista Service Center. A wire redemption may be requested by telephone or wire to
the Vista Service Center. For telephone redemptions, call the Vista Service
Center at 1-800-622-4273.
In making redemption requests, the names of the registered shareholders on
your account and your account number must be supplied, along with any
certificates that represent shares you want to sell. The price you will receive
is the next net asset value calculated after the Fund receives your request in
proper form. In order to receive that day's net asset value, the Vista Service
Center must receive your request before the close of regular trading on the New
York Stock Exchange.
The Fund generally sends you payment for your shares by wire in federal
funds on the business day after your request is received. Under unusual
circumstances, the Fund may suspend redemptions, or postpone payment for more
than seven days, as permitted by federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.
The Vista Service Center will employ these and other reasonable
procedures to confirm that instructions communicated by telephone are genuine;
if it fails to employ reasonable procedures, the Fund may be liable for any
losses due to unauthorized or fraudulent instructions. An investor agrees,
however, that to the extent permitted by applicable law, neither the Fund nor
its agents will be liable for any loss, liability, cost or expense arising out
of any redemption request, including any fraudulent or unauthorized request. For
information, consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request or contact your
Dealer. The Telephone Redemption Privilege is not available if you were issued
certificates for shares that remain outstanding. The Telephone Redemption
Privilege may be modified or terminated without notice.
Selling shares through your Dealer. Your Dealer must receive your request
before the close of regular trading on the New York Stock Exchange to receive
that day's net asset value. Your Dealer will be responsible for furnishing all
necessary documentation to the Vista Service Center, and may charge you for its
services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem
your shares if at such time the aggregate net asset value of the shares in your
account is less than $1,000,000. In the event of any such redemption, you will
receive at least 60 days notice prior to the redemption.
How to Exchange Your Shares
You can exchange your shares for Institutional Shares of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer Institutional Shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully prior to any exchange
and retained for future reference.
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For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the amount or
number of exchanges or reject any exchange. In addition, any shareholder who
makes more than ten exchanges of shares involving the Fund in a year or three in
a calendar quarter will be charged a $5.00 administration fee for each such
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult the Vista Service Center before requesting an exchange.
The exchange privilege is subject to change or termination. See the SAI to find
out more about the exchange privilege.
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m, Eastern time), on each Fund Business Day, by dividing the
net assets of the Fund attributable to that class by the total number of
outstanding shares of that class. Values of assets held by the Fund (i.e., the
value of its investment in the Portfolio and its other assets) are determined on
the basis of their market or other fair value, as described in the SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund distributes any net investment income at least semi-annually and
any net realized capital gains at least annually. Distributions from capital
gains are made after applying any available capital loss carryovers.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares; (2) receive distributions from net
investment income in cash or by ACH to a pre-established bank account while
reinvesting capital gains distributions in additional shares; or (3) receive all
distributions in cash or by ACH. You can change your distribution option by
notifying the Vista Service Center in writing. If you do not select an option
when you open your account, all distributions will be reinvested. All
distributions not paid in cash or by ACH will be reinvested in shares of the
class on which the distributions are paid. You will receive a statement
confirming reinvestment of distributions in additional Fund shares promptly
following the quarter in which the reinvestment occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
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All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
A portion of the ordinary income dividends paid by the Fund may qualify
for the 70% dividends-received deduction for corporate shareholders.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Institutional Shares of the Fund. These services
include assisting with purchase and redemption transactions, maintaining
shareholder accounts and records, furnishing customer statements, transmitting
shareholder reports and communications to customers and other similar
shareholder liaison services. For performing these services, each shareholder
servicing agent receives an annual fee of up to 0.25% of the average daily net
assets of Institutional Shares of the Fund held by investors for whom the
shareholder servicing agent maintains a servicing relationship. Shareholder
servicing agents may subcontract with other parties for the provision of
shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator
Chase acts as the administrator for the Fund and the Portfolio and is
entitled to receive from each of the Fund and the Portfolio a fee computed daily
and paid monthly at an annual rate equal to 0.05% of their respective average
daily net assets.
Sub-Administrator and Distributor
Vista Fund Distributors, Inc. ("VFD") acts as the Fund's
sub-administrator and distributor. VFD is a subsidiary of The BISYS Group, Inc.
and is unaffiliated with Chase. For the sub-administrative services it performs,
VFD is entitled to receive a fee from the Fund at an annual rate equal to 0.05%
of the Fund's average daily net assets. VFD has agreed to use a portion of this
fee to pay for certain expenses incurred in connection
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with organizing new series of the Trust and certain other ongoing expenses of
the Trust. VFD is located at 101 Park Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Shareholder servicing and
distribution fees are allocated to specific classes of the Fund. In addition,
the Fund may allocate transfer agency and certain other expenses by class.
Service providers to the Fund may, from time to time, voluntarily waive all or a
portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Shares have no
pre-emptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of the Fund generally vote
together except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class.
The Fund issues multiple classes of shares. This Prospectus relates only
to Institutional Shares of the Fund, one class of shares offered by the Fund.
Institutional Shares may be purchased only by qualified investors that make an
initial investment of $1,000,000 or more. "Qualified investors" are defined as
institutions, trusts, partnerships, corporations, qualified and other retirement
plans and fiduciary accounts opened by a bank, trust company or thrift
institution which exercises investment authority over such accounts. The Fund
offers other classes of shares in addition to these classes. The categories of
investors that are eligible to purchase shares may differ for each class of Fund
shares. In addition, other classes of Fund shares may be subject to differences
in sales charge arrangements, ongoing distribution and service fee levels, and
levels of certain other expenses, which will affect the relative performance of
the different classes. Investors may call 1-800-622-4273 to obtain additional
information about other classes of shares of the Fund that are offered. Any
person entitled to receive compensation for selling or servicing shares of the
Fund may receive different levels of compensation with respect to one class of
shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
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Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Unique Characteristics of Master/Feeder Fund Structure
Unlike other mutual funds which directly acquire and manage their own
portfolio securities, the Fund invests all of its investable assets in the
Portfolio, a separate registered investment company. Therefore, a shareholder's
interest in the Portfolio's securities is indirect. In addition to selling a
beneficial interest to the Fund, the Portfolio may sell beneficial interests to
other mutual funds or institutional investors. Such investors will invest in the
Portfolio on the same terms and conditions and will pay a proportionate share of
the Portfolio's expenses. However, other investors investing in the Portfolio
are not required to sell their shares at the same public offering prices as the
Fund, and may bear different levels of ongoing expenses than the Fund.
Shareholders of the Fund should be aware that these differences may result in
differences in returns experienced in the different funds that invest in the
Portfolio. Such differences in returns are also present in other mutual fund
structures.
Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns. Additionally, the Portfolio
may become less diverse, resulting in increased portfolio risk. However, this
possibility also exists for traditionally structured funds which have large or
institutional investors. Funds with a greater pro rata ownership in the
Portfolio could have effective voting control of the operations of the
Portfolio. Whenever the Trust is requested to vote on matters pertaining to the
Portfolio, the Trust will hold a meeting of shareholders of the Fund and will
cast all of its votes in the same proportion as do the Fund's shareholders.
Shares of the Fund for which no voting instructions have been received will be
voted in the same proportion as those shares for which voting instructions are
received. Certain changes in the Portfolio's objective, policies or restrictions
may require the Trust to withdraw the Fund's interest in the Portfolio. Any
withdrawal could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution from the Portfolio). The Fund could incur
brokerage fees or other transaction costs in converting such securities to cash.
In addition, a distribution in kind may result in a less diversified portfolio
of investments or adversely affect the liquidity of the Fund.
State securities regulations generally do not permit the same individuals
who are disinterested Trustees of the Trust to be Trustees of the Portfolio
absent the adoption of written procedures by a majority of the disinterested
Trustees of the Trust reasonably appropriate to deal with potential conflicts of
interest up to and including creating a separate Board of Trustees. The Trustees
of the Trust, including a majority of the disinterested Trustees, have adopted
procedures they believe are reasonably appropriate to deal with any conflict of
interest up to and including creating a separate Board of Trustees.
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Investors in the Fund may obtain information about whether an investment
in the Portfolio may be available through other funds by calling the Vista
Service Center at 1-800-622-4273.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income per share during a recent 30-day period by the
maximum public offering price per share of such class on the last day of that
period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the public offering price. Total return may also be presented for
other periods.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other mutual
funds and other investment vehicles. Quotation of investment performance for any
period when a fee waiver or expense limitation was in effect will be greater
than if the waiver or limitation had not been in effect. The Fund's
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performance may be compared to other mutual funds, relevant indices and rankings
prepared by independent services. See the SAI.
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<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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<PAGE>
PROSPECTUS
VISTA[SM] LARGE CAP EQUITY FUND
Class A and B shares
May 6, 1996
Investment Strategy: Capital Growth
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-34-VISTA. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary.........................................................
The expenses you might pay on your Fund investment, including examples
Fund Objective..........................................................
Investment Policies.....................................................
The kinds of securities in which the Fund invests,
investment policies and techniques, and risks
Management..............................................................
Chase Manhattan Bank, the Fund's adviser; Chase Asset Management,
the Fund's sub-adviser, and the individuals who manage the Fund
About Your Investment...................................................
Alternative sales arrangements
How to Buy, Sell and Exchange Shares....................................
How the Fund Values its Shares..........................................
How Distributions are Made; Tax Information.............................
How the Fund distributes its earnings, and
tax treatment related to those earnings
Other Information Concerning the Fund...................................
Distribution plans, shareholder servicing agents, administration,
custodian, expenses, organization and regulatory matters
Performance Information.................................................
How performance is determined, stated and/or advertised
Make the Most of Your Vista Privileges..................................
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EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the Fund based on
expenses incurred in the most recent fiscal year. The examples show the
cumulative expenses attributable to a hypothetical $1,000 investment over
specified periods.
Class A Class B
Shareholder Transaction Expenses Shares Shares
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)................ 4.75% None
Maximum Deferred Sales Charge
(as a percentage of the lower of original
purchase price or redemption proceeds)(*).......... None 5.00%
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee (after estimated waiver) (**) 0.00% 0.00%
12b-1 Fee(***)..................................... 0.25% 0.75%
Shareholder Servicing Fee.......................... 0.25% 0.25%
Other Expenses..................................... 0.88% 0.88%
----- -----
Total Fund Operating Expenses (after waiver of fee)(**) 1.38% 1.88%
===== =====
Examples
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares(+)................ $61 $89 $119 $205
Class B Shares:
Assuming complete
redemption at the
end of the
period(++)(+++)................ $71 $92 $125 $207
Assuming no
redemptions (+++).............. $19 $59 $102 $207
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* The maximum deferred sales charge on Class B shares applies to redemptions
during the first year after purchase; the charge generally declines by 1%
annually thereafter (except in the fourth year), reaching zero after six
years. See "How to Buy, Sell and Exchange Shares."
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** Reflects current waiver arrangement to maintain Total Fund Operating
Expenses at the levels indicated in the table above. Absent such waiver,
the Investment Advisory Fee would be 0.40% for Class A and Class B shares
and Total Fund Operating Expenses would be 1.78% and 2.28% for Class A and
Class B shares, respectively.
*** Long-term shareholders in mutual funds with 12b-1 fees, such as Class A and
Class B shareholders of the Fund, may pay more than the economic equivalent
of the maximum front-end sales charge permitted by rules of the National
Association of Securities Dealers, Inc.
+ Assumes deduction at the time of purchase of the maximum sales charge.
++ Assumes deduction at the time of redemption of the maximum applicable
deferred sales charge.
+++ Ten-year figures assume conversion of Class B shares to Class A shares at
the beginning of the ninth year after purchase. See "How to Buy, Sell and
Exchange Shares."
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
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FUND OBJECTIVE
Vista Large Cap Equity Fund seeks long-term capital growth. The Fund is
not intended to be a complete investment program, and there is no assurance it
will achieve its objective.
INVESTMENT POLICIES
Investment Approach
Under normal market conditions, the Fund will invest at least 80% of its
total assets in equity securities and at least 65% of its total assets in equity
securities of established companies with market capitalizations in excess of $1
billion. Such companies typically have a large number of publicly held shares
and high trading volume, resulting in a high degree of liquidity.
The Fund's advisers intend to utilize both quantitative and fundamental
research to identify undervalued stocks with a catalyst for positive change. The
Fund's advisers will evaluate companies by assessing the strongest sectors of
the market over the economic cycle, identifying those companies with favorable
earnings prospects, and then selecting the most attractive values. The Fund's
advisers will consider industry diversification as an important factor and will
try to maintain representation in a variety of market sectors, although sector
emphasis will shift as a result of changes in the outlook for earnings among
market sectors.
The Fund may invest any portion of its assets not invested in equity
securities in high quality money market instruments and repurchase agreements.
For temporary defensive purposes, the Fund may invest without limitation in
these instruments. To the extent that the Fund departs from its investment
policies during temporary defensive periods, its investment objective may not be
achieved.
The Fund is classified as a "diversified" fund under federal securities
law.
In lieu of investing directly, the Fund is authorized to seek to achieve
its objective by investing all of its investable assets in an investment company
having substantially the same investment objective and policies as the Fund.
Other Investment Practices
The Fund may also engage in the following investment practices, when
consistent with the Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI.
Foreign Securities. The Fund may invest up to 20% of its total assets in
foreign securities, including Depositary Receipts. Since foreign securities are
normally denominated and traded in foreign currencies, the values of the Fund's
foreign investments may be affected favorably or unfavorably by currency
exchange rates and exchange control regulations. There may be less information
publicly available about foreign companies than U.S. companies, and they are not
generally subject to accounting, auditing and financial reporting standards and
practices comparable to those in the U.S. The securities of foreign companies
may be less liquid and more volatile than the securities of comparable U.S.
companies. Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in payment or delivery of securities or in the
recovery of the Fund's assets held abroad) and expenses. It is possible that
nationalization or expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial instability and
diplomatic developments could affect the value of the Fund's investments in
certain foreign countries. Foreign laws may restrict the ability to invest in
certain countries or issuers and special tax considerations will apply to
foreign securities. The risks can increase if the Fund invests in securities of
issuers in emerging markets.
The Fund may invest its assets in securities of foreign issuers in the
form of American Depositary Receipts, European Depositary Receipts, Global
Depositary Receipts or other similar securities representing securities of
foreign issuers (collectively, "Depositary Receipts"). The Fund treats
Depositary Receipts as interests in the underlying securities for purposes
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of its investment policies. The Fund will limit its investment in Depositary
Receipts not sponsored by the issuer of the underlying securities to no more
than 5% of the value of its net assets (at the time of investment).
Money Market Instruments. The Fund may invest in cash or high-quality,
short-term money market instruments. Such instruments may include U.S.
Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Repurchase Agreements, Securities Loans and Forward Commitments. The Fund
may enter into agreements to purchase and resell securities at an agreed-upon
price and time. The Fund also has the ability to lend portfolio securities in an
amount equal to not more than 30% of its total assets to generate additional
income. These transactions must be fully collateralized at all times. The Fund
may purchase securities for delivery at a future date, which may increase its
overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date. These transactions involve
some risk to the Fund if the other party should default on its obligation and
the Fund is delayed or prevented from recovering the collateral or completing
the transaction.
Borrowings and Reverse Repurchase Agreements. The Fund may borrow money
from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Fund may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Fund enters into a reverse repurchase agreement, it
will establish a segregated account in which it will maintain liquid assets on a
daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Fund would be required to pay interest on amounts
obtained through reverse repurchase agreements, which are considered borrowings
under federal securities laws.
Stand-By Commitments. The Fund may enter into put transactions, including
transactions sometimes referred to as stand-by commitments, with respect to
money market instruments in its portfolio. In these transactions, the Fund would
acquire the right to sell a security at an agreed upon price within a specified
period prior to its maturity date. These transactions involve some risk to the
Fund if the other party should default on its obligation and the Fund is delayed
or prevented from recovering the collateral or completing the transaction.
Acquisition of puts will have the effect of increasing the cost of the
securities subject to the put and thereby reducing the yields otherwise
available from such securities.
Convertible Securities. The Fund may invest up to 20% of its net assets in
convertible securities, which are securities generally offering fixed interest
or dividend yields which may be converted either at a stated price or stated
rate for common or preferred stock. Although to a lesser extent than with
fixed-income securities generally, the market value of convertible securities
tends to decline as interest rates increase, and increase as interest rates
decline. Because of the conversion feature, the market value of convertible
securities also tends to vary with fluctuations in the market value of the
underlying common or preferred stock.
Other Investment Companies. The Fund may invest up to 10% of its total
assets in shares of other investment companies, subject to applicable regulatory
limitations.
STRIPS. The Fund may invest up to 20% of its total assets in separately
traded principal and interest components of securities backed by the full faith
and credit of the U.S. Government, including instruments known as "STRIPS". The
value of these instruments tends to fluctuate more in response to changes in
interest rates than the value of ordinary interest-paying debt securities with
similar maturities. The risk is greater when the period to maturity is longer.
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Derivatives and Related Instruments. The Fund may invest its assets in
derivative and related instruments to hedge various market risks or to increase
the Fund's income or gain. Some of these instruments will be subject to asset
segregation requirements to cover the Fund's obligations. The Fund may (i)
purchase, write and exercise call and put options on securities and securities
indexes (including using options in combination with securities, other options
or derivative instruments); (ii) enter into swaps, futures contracts and options
on futures contracts; (iii) employ forward currency contracts; and (iv) purchase
and sell structured products, which are instruments designed to restructure or
reflect the characteristics of certain other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Fund invests may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of the Fund to successfully utilize
these instruments may depend in part upon the ability of the Fund's advisers to
forecast these factors correctly. Inaccurate forecasts could expose the Fund to
a risk of loss. There can be no guarantee that there will be a correlation
between price movements in a hedging instrument and in the portfolio assets
being hedged. The Fund is not required to use any hedging strategies. Hedging
strategies, while reducing risk of loss, can also reduce the opportunity for
gain. Derivatives transactions not involving hedging may have speculative
characteristics, involve leverage and result in more risk to the Fund than
hedging strategies using the same instruments. There can be no assurance that a
liquid market will exist at a time when the Fund seeks to close out a
derivatives position. Activities of large traders in the futures and securities
markets involving arbitrage, "program trading," and other investment strategies
may cause price distortions in derivatives markets. In certain instances,
particularly those involving over-the-counter transactions or forward contracts,
there is a greater potential that a counterparty or broker may default.In the
event of a default, the Fund may experience a loss. For additional information
concerning derivatives, related instruments and the associated risks, see the
SAI.
Portfolio Turnover. The frequency of the Fund's portfolio transactions will
vary from year to year. The Fund's investment policies may lead to frequent
changes in investments, particularly in periods of rapidly changing market
conditions. High portfolio turnover rates would generally result in higher
transaction costs, including brokerage commissions or dealer mark-ups, and would
make it more difficult for the Fund to qualify as a registered investment
company under federal tax law. See "How Distributions are Made; Tax Information"
and "Other Information Concerning the Fund--Certain Regulatory Matters."
Limiting Investment Risks
Specific investment restrictions help the Fund limit investment risks
for its shareholders. These restrictions prohibit the Fund from: (a) with
respect to 75% of its total assets, holding more than 10% of the voting
securities of any issuer or investing more than 5% of its total assets in the
securities of any one issuer (other than U.S. Government obligations); (b)
investing more than 15% of its net assets in illiquid securities (which include
securities restricted as to resale unless they are determined to be readily
marketable in accordance with procedures established by the Board of Trustees);
or (c) investing more than 25% of its total assets in any one industry. A
complete description of these and other investment policies is included in the
SAI. Except for restriction (c) above and investment policies (including its
investment objective) designated as fundamental in the SAI, the Fund's
investment policies are not fundamental. The Trustees may change any
non-fundamental investment policy without shareholder approval.
Risk Factors
The Fund does not constitute a balanced or complete investment program,
and the net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities in the Fund's portfolio. The Fund is
subject to the general risks and considerations associated with equity
investing.
For a discussion of certain other risks associated with the Fund's
additional investment activities, see "Other Investment Practices" above.
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<PAGE>
MANAGEMENT
The Fund's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the Fund
pursuant to an Investment Advisory Agreement and has overall responsibility for
investment decisions of the Fund, subject to the oversight of the Board of
Trustees. Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation,
a bank holding company. Chase and its predecessors have over 100 years of money
management experience. For its investment advisory services to the Fund, Chase
is entitled to receive an annual fee computed daily and paid monthly based at an
annual rate equal to 0.40% of the Fund's average daily net assets. Chase is
located at 270 Park Avenue, New York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Fund pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly-owned operating subsidiary of
Chase. CAM makes investment decisions for the Fund on a day-to-day basis. For
these services, CAM is entitled to receive a fee, payable by Chase from its
advisory fee, at an annual rate equal to 0.20% of the Fund's average daily net
assets. CAM was recently formed for the purpose of providing discretionary
investment advisory services to institutional clients and to consolidate Chase's
investment management function. The same individuals who serve as portfolio
managers for Chase also serve as portfolio managers for CAM. CAM is located at
1211 Avenue of the Americas, New York, New York 10036.
Portfolio Manager. Karen L. Shapiro, Vice President of Chase has been
responsible for the day-to-day management of the Fund's portfolio since joining
Chase in May 1996. Prior to joining Chase, Ms. Shapiro managed The Hanover Blue
Chip Growth Fund and was a vice president and senior portfolio manager at The
Portfolio Group Inc. and a member of its investment committee. Prior to joining
The Portfolio Group Inc. Ms. Shapiro was a portfolio manager in the personal
investment consulting department at Manufacturers Hanover Trust Company.
ABOUT YOUR INVESTMENT
Alternative Sales Arrangements
Class A shares. An investor who purchases Class A shares pays a sales
charge at the time of purchase. As a result, Class A shares are not subject to
any sales charges when they are redeemed. Certain purchases of Class A shares
qualify for reduced sales charges. Class A shares have lower combined 12b-1 and
service fees than Class B shares. See "How to Buy, Sell and Exchange Shares" and
"Other Information Concerning the Fund."
Class B shares. Class B shares are sold without an initial sales charge,
but are subject to a contingent deferred sales charge ("CDSC") if redeemed
within a specified period after purchase. Class B shares also have higher
combined 12b-1 and service fees than Class A shares.
Class B shares automatically convert into Class A shares, based on
relative net asset value, at the beginning of the ninth year after purchase. For
more information about the conversion of Class B shares, see the SAI. This
discussion will include information about how shares acquired through
reinvestment of distributions are treated for conversion purposes. Class B
shares provide an investor the benefit of putting all of the investor's dollars
to work from the time the investment is made. Until conversion, Class B shares
will have a higher expense ratio and pay lower dividends than Class A shares
because of the higher combined 12b-1 and service fees. See "How to Buy, Sell and
Exchange Shares" and "Other Information Concerning the Fund."
Which arrangement is best for you? The decision as to which class of
shares provides a more suitable investment for an investor depends on a number
of factors, including the amount and intended length of the
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investment. Investors making investments that qualify for reduced sales charges
might consider Class A shares. Investors who prefer not to pay an initial
sales charge might consider Class B shares. In almost all cases, investors
planning to purchase $250,000 or more of the Fund's shares will pay lower
aggregate charges and expenses by purchasing Class A shares.
HOW TO BUY, SELL AND EXCHANGE SHARES
How to Buy Shares
You can open a Fund account with as little as $2,500 ($1,000 for IRAs,
SEP-IRAs and the Systematic Investment Plan) and make additional investments at
any time with as little as $100. You can buy Fund shares three ways--through an
investment representative, through the Fund's distributor by calling the Vista
Service Center, or through the Systematic Investment Plan.
All purchases made by check should be in U.S. dollars and made payable to
the Vista Funds. Third party checks, credit cards and cash will not be accepted.
The Fund reserves the right to reject any purchase order or cease offering
shares for purchase at any time. When purchases are made by check, redemptions
will not be allowed until clearance of the purchase check, which may take 15
calendar days or longer. In addition, the redemption of shares purchased through
ACH will not be allowed until clearance of your payment, which may take 7
business days or longer.
Buying shares through the Fund's distributor. Complete and return the
enclosed application and your check in the amount you wish to invest to the
Vista Service Center.
Buying shares through systematic investing. You can make regular
investments of $100 or more per transaction through automatic periodic deduction
from your bank checking or savings account. Shareholders electing to start this
Systematic Investment Plan when opening an account should complete Section 8 of
the account application. Current shareholders may begin such a plan at any time
by sending a signed letter with signature guarantee and a deposit slip or voided
check to the Vista Service Center. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Shares are sold at the public offering price based on the net asset value
next determined after the Vista Service Center receives your order in proper
form. In most cases, in order to receive that day's public offering price, the
Vista Service Center must receive your order before the close of regular trading
on the New York Stock Exchange. If you buy shares through your investment
representative, the representative must receive your order before the close of
regular trading on the New York Stock Exchange to receive that day's public
offering price. Orders for shares are accepted by the Fund after funds are
converted to federal funds. Orders paid by check and received by 2:00 p.m.,
Eastern Time will generally be available for the purchase of shares the
following business day.
If you are considering redeeming or exchanging shares or transferring
shares to another person shortly after purchase, you should pay for those shares
with a certified check to avoid any delay in redemption, exchange or transfer.
Otherwise the Fund may delay payment until the purchase price of those shares
has been collected or, if you redeem by telephone, until 15 calendar days after
the purchase date. To eliminate the need for safekeeping, the Fund will not
issue certificates for your Class A shares unless you request them. Due to the
conversion feature of Class B shares, certificates for Class B shares will not
be issued and all Class B shares will be held in book entry form.
Class A Shares
The public offering price of Class A shares is the net asset value plus a
sales charge that varies depending on the size of your purchase. The Fund
receives the net asset value. The sales charge is allocated between your
broker-dealer and the Fund's distributor as shown in the following table, except
when the Fund's distributor, in its discretion, allocates the entire amount to
your broker-dealer.
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- -------------------------------------------------------------------------------
Sales charge as a
percentage of: Amount of sales charge
Amount of transaction at Offering Net amount reallowed to dealers as a
offering price($) price invested percentage of offering price
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Under 100,000 4.75 4.99 4.00
- -------------------------------------------------------------------------------
100,000 but under 250,000 3.75 3.90 3.25
- -------------------------------------------------------------------------------
250,000 but under 500,000 2.50 2.56 2.25
- -------------------------------------------------------------------------------
500,000 but under 1,000,000 2.00 2.04 1.75
- -------------------------------------------------------------------------------
There is no initial sales charge on purchases of Class A shares of $1
million or more.
The Fund's distributor pays broker-dealers commissions on net sales of
Class A shares of $1 million or more based on an investor's cumulative
purchases. Such commissions are paid at the rate of 1.00% of the amount under
$2.5 million, 0.75% of the next $7.5 million, 0.50% of the next $40 million and
0.20% thereafter. The Fund's distributor may withhold such payments with respect
to short-term investments.
Class B Shares
~
Class B shares are sold without an initial sales charge, although a CDSC
will be imposed if you redeem shares within a specified period after purchase,
as shown in the table below. The following types of shares may be redeemed
without charge at any time: (i) shares acquired by reinvestment of distributions
and (ii) shares otherwise exempt from the CDSC, as described below. For other
shares, the amount of the charge is determined as a percentage of the lesser of
the current market value or the purchase price of shares being redeemed.
Year 1 2 3 4 5 6 7 8+
- --------------------------------------------------------------
CDSC 5% 4% 3% 3% 2% 1% 0% 0%
In determining whether a CDSC is payable on any redemption, the Fund will
first redeem shares not subject to any charge, and then shares held longest
during the CDSC period. When a share that has appreciated in value is redeemed
during the CDSC period, a CDSC is assessed only on its initial purchase price.
For information on how sales charges are calculated if you exchange your shares,
see "How to Exchange Your Shares." The Fund's distributor pays broker-dealers a
commission of 4.00% of the offering price on sales of Class B shares, and the
distributor receives the entire amount of any CDSC you pay.
General
You may be eligible to buy Class A shares at reduced sales charges.
Consult your investment representative or the Vista Service Center for details
about Vista's combined purchase privilege, cumulative quantity discount,
statement of intention, group sales plan, employee benefit plans, and other
plans. Descriptions are also included in the enclosed application and in the
SAI. In addition, sales charges will not apply to shares purchased with
redemption proceeds received within the prior ninety days from non-Vista mutual
funds on which the investor paid a front-end or contingent deferred sales
charge.
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A participant-directed employee benefit plan participating in a
"multi-fund" program approved by the Board of Trustees may include amounts
invested in the other mutual funds participating in such program for purposes of
determining whether the plan may purchase Class A shares at net asset value.
These investments will also be included for purposes of the discount privileges
and programs described above.
The Fund may sell Class A shares at net asset value without an initial
sales charge to the current and retired Trustees (and their immediate families),
current and retired employees (and their immediate families) of Chase, the
Fund's distributor and transfer agent or any affiliates or subsidiaries thereof,
registered representatives and other employees (and their immediate families) of
broker-dealers having selected dealer agreements with the Fund's distributor,
employees (and their immediate families) of financial institutions having
selected dealer agreements with the Fund's distributor (or otherwise having an
arrangement with a broker-dealer or financial institution with respect to sales
of Vista fund shares) financial institution trust departments investing an
aggregate of $1 million or more in the Vista Family of Funds and clients of
certain administrators of tax-qualified plans when proceeds from repayments of
loans to participants are invested (or reinvested) in the Vista Family of Funds.
No initial sales charge will apply to the purchase of Class A shares of
the Fund by an investor seeking to invest the proceeds of a qualified retirement
plan where a portion of the plan was invested in the Vista Family of Funds, any
qualified retirement plan with 50 or more participants, or an individual
participant in a tax-qualified plan making a tax-free rollover or transfer of
assets from the plan in which Chase or an affiliate serves as trustee or
custodian of the plan or manages some portion of the plan's assets.
Purchases of Class A shares of the Fund may be made with no initial sales
charge through an investment adviser or financial planner that charges a fee for
its services. Purchases of Class A shares of the Fund may be made with no
initial sales charge (i) by an investment adviser, broker or financial planner,
provided arrangements are preapproved and purchases are placed through an
omnibus account with the Fund or (ii) by clients of such investment adviser or
financial planner who place trades for their own accounts, if such accounts are
linked to a master account of such investment adviser or financial planner on
the books and records of the broker or agent. Such purchases may be made for
retirement and deferred compensation plans and trusts used to fund those plans.
Purchases of Class A shares of the Fund may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary exercising investment discretion, provided that
appropriate notification of such fiduciary relationship is reported at the time
of the investment to the Fund, the Fund's distributor or the Vista Service
Center.
Shareholders of record of any Vista fund as of November 30, 1990 and
certain immediate family members may purchase Class A shares of the Fund with no
initial sales charge for as long as they continue to own Class A shares of any
Vista fund, provided there is no change in account registration. Shareholders of
record of any portfolio of The Hanover Funds, Inc. or The Hanover Investment
Funds, Inc. as of May 3, 1996 and certain related investors may purchase Class A
shares of the Fund with no initial sales charge for as long as they continue to
own shares of any Vista fund following this date, provided there is no change in
account registration.
The Fund may sell Class A shares at net asset value without an initial
sales charge in connection with the acquisition by the Fund of assets of an
investment company or personal holding company. The CDSC will be waived on
redemption of Class B shares arising out of death or disability or in connection
with certain withdrawals from IRA or other retirement plans. Up to 12% of the
value of Class B shares subject to a systematic withdrawal plan may also be
redeemed each year without a CDSC, provided that the Class B account had a
minimum balance of $20,000 at the time the systematic withdrawal plan was
established. The SAI contains additional information about purchasing the Fund's
shares at reduced sales charges.
The Fund reserves the right to change any of these policies on purchases
without an initial sales charge at any time and may reject any such purchase
request.
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<PAGE>
Shareholders of other Vista funds may be entitled to exchange their shares
for, or reinvest distributions from their funds in, shares of the Fund at net
asset value.
How to Sell Shares
You can sell your shares to the Fund any day the New York Stock Exchange
is open, either directly to the Fund or through your investment representative.
The Fund will only forward redemption payments on shares for which it has
collected payment of the purchase price.
Selling shares directly to the Fund. Send a signed letter of instruction to
the Vista Service Center, along with any certificates that represent shares you
want to sell. The price you will receive is the next net asset value calculated
after the Fund receives your request in proper form, less any applicable CDSC.
In order to receive that day's net asset value, the Vista Service Center must
receive your request before the close of regular trading on the New York Stock
Exchange.
If you sell shares having a net asset value of $100,000 or more, the
signatures of registered owners or their legal representatives must be
guaranteed by a bank, broker-dealer or certain other financial institutions. See
the SAI for more information about where to obtain a signature guarantee.
If you want your redemption proceeds sent to an address other than your
address as it appears on Vista's records, a signature guarantee is required. The
Fund may require additional documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Vista Service Center for details.
The Fund generally sends you payment for your shares the business day after
your request is received, assuming the Fund has collected payment of the
purchase price of your shares. Under unusual circumstances, the Fund may
suspend redemptions, or postpone payment for more than seven days, as permitted
by federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the fund with his or her account registration
and address as it appears on the Fund's records.
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request, as described above,
or contact your investment representative. The Telephone Redemption Privilege is
not available if you were issued certificates for shares that remain
outstanding. The Telephone Redemption Privilege may be modified or terminated
without notice.
Systematic withdrawal. You can make regular withdrawals of $50 or ($100
for Class B accounts) monthly, quarterly or semiannually. A minimum account
balance of $5,000 is required to establish a systematic withdrawal plan for
Class A accounts. Call the Vista Service Center at 1-800-34-VISTA for complete
instructions.
Selling shares through your investment representative. Your investment
representative must receive your request before the close of regular trading on
the New York Stock Exchange to receive that day's net asset
-12-
<PAGE>
value. Your investment representative will be responsible for furnishing all
necessary documentation to the Vista Service Center, and may charge you for its
services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $500 or if you purchase through the Systematic Investment
Plan and fail to meet the Fund's investment minimum within a twelve month
period. In the event of any such redemption, you will receive at least 60 days
notice prior to the redemption. In the event the Fund redeems Class B shares
pursuant to this provision, no CDSC will be imposed.
How to Exchange Your Shares
You can exchange your shares for shares of the same class of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer all classes of shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully and retained for
future reference. If you exchange shares subject to a CDSC, the transaction will
not be subject to the CDSC. However, when you redeem the shares acquired through
the exchange, the redemption may be subject to the CDSC, depending upon when you
originally purchased the shares. The CDSC will be computed using the schedule of
any fund into or from which you have exchanged your shares that would result in
your paying the highest CDSC applicable to your class of shares. In computing
the CDSC, the length of time you have owned your shares will be measured from
the date of original purchase and will not be affected by any exchange.
An exchange of Class B shares into any of the Vista money market funds
other than the Class B shares of the Vista Prime Money Market Fund will be
treated as a redemption -- and therefore subject to the conditions of the CDSC
- -- and a subsequent purchase. Class B shares of any Vista non-money market fund
may be exchanged into the Class B shares of the Vista Prime Money Market Fund in
order to continue the aging of the initial purchase of such shares.
For federal income tax purposes, an exchange is treated as a sale of shares
and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the amount or
number of exchanges or reject any exchange. In addition, any shareholder who
makes more than ten exchanges of shares involving the Fund in a year or three in
a calendar quarter will be charged a $5.00 administration fee for each such
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult the Vista Service Center before requesting an exchange.
See the SAI to find out more about the exchange privilege.
Reinstatement privilege. Class A shareholders have a one time privilege of
reinstating their investment in the Fund at net asset value next determined
subject to written request within 90 calendar days of the redemption,
accompanied by payment for the shares (not in excess of the redemption). Class B
shareholders who have redeemed their shares and paid a CDSC with such redemption
may purchase Class A shares with no initial sales charge (in an amount not in
excess of their redemption proceeds) if the purchase occurs within 90 days of
the redemption of the Class B shares.
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<PAGE>
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each business day of the Fund, by
dividing the net assets of the Fund attributable to that class by the total
number of outstanding shares of that class. Values of assets held by the Fund
are determined on the basis of their market or other fair value, as described in
the SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund distributes any net investment income at least quarterly and any
net realized capital gains at least annually. Distributions from capital gains
are made after applying any available capital loss carryovers. Distributions
paid by the Fund with respect to Class A shares will generally be greater than
those paid with respect to Class B shares because expenses attributable to Class
B shares will generally be higher.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares without a sales charge; (2) receive
distributions from net investment income in cash or by ACH to a pre-established
bank account while reinvesting capital gains distributions in additional shares
without a sales charge; or (3) receive all distributions in cash or by ACH. You
can change your distribution option by notifying the Vista Service Center in
writing. If you do not select an option when you open your account, all
distributions will be reinvested. All distributions not paid in cash or by ACH
will be reinvested in shares of the class on which the distributions are paid.
You will receive a statement confirming reinvestment of distributions in
additional Fund shares promptly following the quarter in which the reinvestment
occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
-14-
<PAGE>
OTHER INFORMATION CONCERNING THE FUND
Distribution Plans
The Fund's distributor is Vista Fund Distributors, Inc. ("VFD"). VFD is a
subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase. The Trust
has adopted Rule 12b-1 distribution plans for Class A and Class B shares which
provide that the Fund will pay distribution fees at annual rates of up to 0.25%
and 0.75% of the average daily net assets attributable to Class A and
Class B shares of the Fund, respectively. Payments under the distribution plans
shall be used to compensate or reimburse the Fund's distributor and
broker-dealers for services provided and expenses incurred in connection with
the sale of Class A and Class B shares, and are not tied to the amount of actual
expenses incurred. Payments may be used to compensate broker-dealers with trail
or maintenance commissions at an annual rate of up to 0.25% of the average daily
net asset value of Class A or Class B shares maintained in the Fund by customers
of these broker-dealers. Trail or maintenance commissions are paid to
broker-dealers beginning the 13th month following the purchase of shares by
their customers. Some activities intended to promote the sale of Class A and
Class B shares will be conducted generally by the Vista Family of Funds, and
activities intended to promote the Fund's Class A or Class B shares may also
benefit the Fund's other shares and other Vista funds.
VFD may provide promotional incentives to broker-dealers that meet
specified sales targets for one or more Vista funds. These incentives may
include gifts of up to $100 per person annually; an occasional meal, ticket to a
sporting event or theater or entertainment for broker-dealers and their guests;
and payment or reimbursement for travel expenses, including lodging and meals,
in connection with attendance at training and educational meetings within and
outside the U.S. Shareholder Servicing Agents
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Class A or Class B shares of the Fund. These
services include assisting with purchase and redemption transactions,
maintaining shareholder accounts and records, furnishing customer statements,
transmitting shareholder reports and communications to customers and other
similar shareholder liaison services. For performing these services, each
shareholder servicing agent receives an annual fee of up to 0.25% of the average
daily net assets of Class A or Class B shares of the Fund held by investors for
whom the shareholder servicing agent maintains a servicing relationship.
Shareholder servicing agents may subcontract with other parties for the
provision of shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator and Sub-Administrator
Chase acts as the Fund's administrator and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets.
VFD provides certain sub-administrative services to the Fund pursuant to a
distribution and sub-administration agreement and is entitled to receive a fee
for these services from the Fund at an annual rate equal to 0.05% of the Fund's
average daily net assets. VFD has agreed to use a portion of this fee to pay for
certain
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<PAGE>
expenses incurred in connection with organizing new series of the Trust and
certain other ongoing expenses of the Trust. VFD is located at 101 Park Avenue,
New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Shareholder servicing and
distribution fees are allocated to specific classes of the Fund. In addition,
the Fund may allocate transfer agency and certain other expenses by class.
Service providers to the Fund may, from time to time, voluntarily waive all or a
portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). Prior to May 6, 1996, the Fund was known as the Vista Equity Fund. The
Trust has reserved the right to create and issue additional series and classes.
Each share of a series or class represents an equal proportionate interest in
that series or class with each other share of that series or class. The shares
of each series or class participate equally in the earnings, dividends and
assets of the particular series or class. Shares have no preemptive or
conversion rights. Shares when issued are fully paid and non-assessable, except
as set forth below. Shareholders are entitled to one vote for each whole share
held, and each fractional share shall be entitled to a proportionate fractional
vote, except that Trust shares held in the treasury of the Trust shall not be
voted. Shares of each class of the Fund generally vote together except when
required under federal securities laws to vote separately on matters that only
affect a particular class, such as the approval of distribution plans for a
particular class.
The Fund issues multiple classes of shares. This Prospectus relates only
to Class A and Class B shares of the Fund. The Fund offers other classes of
shares in addition to these classes. The categories of investors that are
eligible to purchase shares and minimum investment requirements may differ for
each class of Fund shares. In addition, other classes of Fund shares may be
subject to differences in sales charge arrangements, ongoing distribution and
service fee levels, and levels of certain other expenses, which will affect the
relative performance of the different classes. Investors may call 1-800-34-VISTA
to obtain additional information about other classes of shares of the Fund that
are offered. Any person entitled to receive compensation for selling or
servicing shares of the Fund may receive different levels of compensation with
respect to one class of shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
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<PAGE>
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income per share during a recent 30-day period by the
maximum public offering price per share of such class on the last day of that
period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the maximum public offering price (in the case of Class A shares) or
reflecting the deduction of any applicable contingent deferred sales charge (in
the case of Class B shares). Total return may also be presented for other
periods or without reflecting sales charges. Any quotation of investment
performance not reflecting the maximum initial sales charge or contingent
deferred sales charge would be reduced if such sales charges were used.
-17-
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All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other mutual
funds and other investment vehicles. Quotation of investment performance for any
period when a fee waiver or expense limitation was in effect will be greater
than if the waiver or limitation had not been in effect. The Fund's performance
may be compared to other mutual funds, relevant indices and rankings prepared by
independent services. See the SAI.
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<PAGE>
MAKE THE MOST OF YOUR VISTA PRIVILEGES
The following services are available to you as a Vista mutual fund shareholder.
o SYSTEMATIC INVESTMENT PLAN - Invest as much as you wish ($100 or more) in
the first or third week of any month. The amount will be automatically
transferred from your checking or savings account.
o SYSTEMATIC WITHDRAWAL - Make regular withdrawals of $50 or more ($100
or more for Class B accounts) monthly, quarterly or semiannually. A
minimum account balance of $5,000 is required to establish a systematic
withdrawal plan for Class A accounts.
o SYSTEMATIC EXCHANGE - Transfer assets automatically from one Vista account
to another on a regular, prearranged basis. There is no additional charge
for this service.
o FREE EXCHANGE PRIVILEGE - Exchange money between Vista funds in the same
class of shares without charge. The exchange privilege allows you to
adjust your investments as your objectives change.
Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange and systematic withdrawal or exchange.
o REINSTATEMENT PRIVILEGE - Class A shareholders have a one time privilege
of reinstating their investment in the Fund at net asset value next
determined subject to written request within 90 calendar days of the
redemption, accompanied by payment for the shares (not in excess of the
redemption).
Class B shareholders who have redeemed their shares and paid a CDSC with
such redemption may purchase Class A shares with no initial sales charge
(in an amount not in excess of their redemption proceeds) if the purchase
occurs within 90 days of the redemption of the Class B shares.
For more information about any of these services and privileges, call your
shareholder servicing agent, investment representative or the Vista Service
Center at 1-800-34-VISTA. These privileges are subject to change or termination.
-19-
<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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<PAGE>
PROSPECTUS
VISTA[SM] LARGE CAP EQUITY FUND
Institutional Shares
May 6, 1996
Investment Strategy: Capital Growth
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-622-4273. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary........................................................
Financial Highlights...................................................
Fund Objective.........................................................
Investment Policies....................................................
Management.............................................................
How to Purchase, Redeem and Exchange Shares............................
How the Fund Values its Shares.........................................
How Distributions are Made; Tax Information............................
Other Information Concerning the Fund..................................
Performance Information................................................
-2-
<PAGE>
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the
Fund based on expenses incurred in the most recent fiscal year. The example
shows the cumulative expenses attributable to a hypothetical $1,000 investment
over specified periods.
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee.(after estimated waiver)(*).............. 0.00%
12b-1 Fee........................................................ None
Shareholder Servicing Fee........................................ 0.25%
Other Expenses................................................... 0.35%
-----
Total Fund Operating Expenses (after waiver of fee)(*)........... 0.60%
=====
Example
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Year 5 Years 10 Years
------ ------ ------- --------
Institutional Shares..... $6 $19 $33 $75
-----------------------
* Reflects current waiver arrangement to maintain Total Fund Operating
Expenses at the level indicated in the table above. Absent such waiver,
the Investment Advisory Fee would be 0.40% and Total Fund Operating
Expenses would be 1.00%. Chase has agreed voluntarily to waive fees
payable to it and/or reimburse expenses for a period of at least one year
to the extent necessary to prevent Total Fund Operating Expenses of
Institutional Shares of the Fund for such period from exceeding the amount
indicated in the table.
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
-3-
<PAGE>
FINANCIAL HIGHLIGHTS
The following information on selected per share data and ratios with
respect to each of the four fiscal periods commencing after June 30, 1992, and
the related financial statements, have been audited by Price Waterhouse LLP,
independent accountants, whose report expressed an unqualified opinion thereon.
The information on selected per share data and ratios with respect to the fiscal
year ended June 30, 1992 and the period November 30, 1990 to June 30, 1991, have
been audited by other independent accountants, whose report expressed an
unqualified opinion thereon. The following information should be read in
conjunction with the financial statements and notes thereto which are
incorporated by reference in the SAI.
<TABLE>
<CAPTION>
Vista Large Cap Equity Fund
---------------------------
Year
Year Ended 7/1/92** Ended 11/1/90*
----------------------------- through --------- through
10/31/95 10/31/94 10/31/93 10/31/92 6/30/92 6/30/91
-------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period $13.16 $13.65 $12.56 $12.50 $11.43 $10.00
------ ------ ------ ------ ------ ------
Income From Investment Operations:
Net Investment Income 0.277 0.298 0.302 0.080 0.240 0.170
Net Gain in Securities
(both realized and unrealized) 1.744 0.263 1.153 0.500 1.230 1.350
----- ----- ----- ----- ----- -----
Total from Investment Operations 2.021 0.561 1.455 0.580 1.470 1.520
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from Net Investment Income 0.282 0.290 0.304 0.140 0.290 0.090
Distributions from Capital Gains 2.659 0.761 0.062 0.380 0.110 0.000
----- ----- ----- ----- ----- -----
Total Distributions: 2.941 1.051 0.366 0.520 0.400 0.090
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period $ 12.24 $ 13.16 $ 13.65 $ 12.56 $ 12.50 $ 11.43
======= ======= ======= ======= ======= =======
Total Return 20.41% 4.37% 11.73% 4.78% 12.99% 15.25%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) $ 55,417 $ 67,818 $ 120,635 $ 106,088 $ 92,261 $ 95,440
Ratio of Expenses to Average
Net Assets # 0.31% 0.31% 0.31% 0.30% 0.30% 0.28%
Ratio of Net Investment Income
to Average Net Assets # 2.41% 2.30% 2.30% 1.96% 2.29% 2.81%
Ratio of Expenses without waivers
and assumption of expenses
to Average Net Assets # 0.90% 0.95% 0.88% 0.80% 1.02% 1.13%
Ratio of Net Investment Income
without waivers and assumption
of expenses to Average Net Assets # 1.82% 1.66% 1.73% 1.46% 1.57% 1.96%
Portfolio turnover rate 45% 53% 33% 5% 14% 19%
</TABLE>
- -------------------------------
* Commencement of operations.
# Short periods have been annualized.
** In 1992, the Fund's fiscal year-end was changed from June 30 to October 31.
-4-
<PAGE>
FUND OBJECTIVE
Vista Large Cap Equity Fund seeks long-term capital growth. The Fund is
not intended to be a complete investment program, and there is no assurance it
will achieve its objective.
INVESTMENT POLICIES
Investment Approach
Under normal market conditions, the Fund will invest at least 80% of its
total assets in equity securities and at least 65% of its total assets in equity
securities of established companies with market capitalizations in excess of $1
billion. Such companies typically have a large number of publicly held shares
and high trading volume, resulting in a high degree of liquidity.
The Fund's advisers intend to utilize both quantitative and fundamental
research to identify undervalued stocks with a catalyst for positive change. The
Fund's advisers will evaluate companies by assessing the strongest sectors of
the market over the economic cycle, identifying those companies with favorable
earnings prospects, and then selecting the most attractive values. The Fund's
advisers will consider industry diversification as an important factor and will
try to maintain representation in a variety of market sectors, although sector
emphasis will shift as a result of changes in the outlook for earnings among
market sectors.
The Fund may invest any portion of its assets not invested in equity
securities in high quality money market instruments and repurchase agreements.
For temporary defensive purposes, the Fund may invest without limitation in
these instruments. To the extent that the Fund departs from its investment
policies during temporary defensive periods, its investment objective may not be
achieved.
The Fund is clasified as a "diversified" fund under federal securities law.
In lieu of investing directly, the Fund is authorized to seek to achieve
its objective by investing all of its investable assets in an investment company
having substantially the same investment objective and policies as the Fund.
Other Investment Practices
The Fund may also engage in the following investment practices, when
consistent with the Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI.
Foreign Securities. The Fund may invest up to 20% of its total assets in
foreign securities, including Depositary Receipts. Since foreign securities are
normally denominated and traded in foreign currencies, the values of the Fund's
foreign investments may be affected favorably or unfavorably by currency
exchange rates and exchange control regulations. There may be less information
publicly available about foreign companies than U.S. companies, and they are not
generally subject to accounting, auditing and financial reporting standards and
practices comparable to those in the U.S. The securities of foreign companies
may be less liquid and more volatile than the securities of comparable U.S.
companies. Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in payment or delivery of securities or in the
recovery of the Fund's assets held abroad) and expenses. It is possible that
nationalization or expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial instability and
diplomatic developments could affect the value of the Fund's investments in
certain foreign countries. Foreign laws may restrict the ability to invest in
certain countries or issuers and special tax considerations will apply to
foreign securities. The risks can increase if the Fund invests in securities of
issuers in emerging markets.
The Fund may invest its assets in securities of foreign issuers in the form
of American Depositary Receipts, European Depositary Receipts, Global Depositary
Receipts or other similar securities representing securities of foreign issuers
(collectively, "Depositary Receipts"). The Fund treats Depositary Receipts as
interests in the underlying securities for purposes
-5-
<PAGE>
of its investment policies. The Fund will limit its investment in Depositary
Receipts not sponsored by the issuer of the underlying securities to no more
than 5% of the value of its net assets (at the time of investment).
Money Market Instruments. The Fund may invest in cash or high-quality,
short-term money market instruments. Such instruments may include U.S.
Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Repurchase Agreements, Securities Loans and Forward Commitments. The Fund
may enter into agreements to purchase and resell securities at an agreed-upon
price and time. The Fund also has the ability to lend portfolio securities in an
amount equal to not more than 30% of its total assets to generate additional
income. These transactions must be fully collateralized at all times. The Fund
may purchase securities for delivery at a future date, which may increase its
overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date. These transactions involve
some risk to the Fund if the other party should default on its obligation and
the Fund is delayed or prevented from recovering the collateral or completing
the transaction.
Borrowings and Reverse Repurchase Agreements. The Fund may borrow money
from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Fund may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Fund enters into a reverse repurchase agreement, it
will establish a segregated account in which it will maintain liquid assets on a
daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Fund would be required to pay interest on amounts
obtained through reverse repurchase agreements, which are considered borrowings
under federal securities laws.
Stand-By Commitments. The Fund may enter into put transactions, including
transactions sometimes referred to as stand-by commitments, with respect to
money market instruments in its portfolio. In these transactions, the Fund would
acquire the right to sell a security at an agreed upon price within a specified
period prior to its maturity date. These transactions involve some risk to the
Fund if the other party should default on its obligation and the Fund is delayed
or prevented from recovering the collateral or completing the transaction.
Acquisition of puts will have the effect of increasing the cost of the
securities subject to the put and thereby reducing the yields otherwise
available from such securities.
Convertible Securities. The Fund may invest up to 20% of its net assets in
convertible securities, which are securities generally offering fixed interest
or dividend yields which may be converted either at a stated price or stated
rate for common or preferred stock. Although to a lesser extent than with
fixed-income securities generally, the market value of convertible securities
tends to decline as interest rates increase, and increase as interest rates
decline. Because of the conversion feature, the market value of convertible
securities also tends to vary with fluctuations in the market value of the
underlying common or preferred stock.
Other Investment Companies. The Fund may invest up to 10% of its total
assets in shares of other investment companies, subject to applicable regulatory
limitations.
STRIPS. The Fund may invest up to 20% of its total assets in separately
traded principal and interest components of securities backed by the full faith
and credit of the U.S. Government, including instruments known as "STRIPS". The
value of these instruments tends to fluctuate more in response to changes in
interest rates than the value of ordinary interest-paying debt securities with
similar maturities. The risk is greater when the period to maturity is longer.
Derivatives and Related Instruments. The Fund may invest its assets in
derivative and related instruments to hedge various market risks or to increase
the Fund's income or gain. Some of these instruments will
-6-
<PAGE>
be subject to asset segregation requirements to cover the Fund's obligations.
The Fund may (i) purchase, write and exercise call and put options on securities
and securities indexes (including using options in combination with securities,
other options or derivative instruments); (ii) enter into swaps, futures
contracts and options on futures contracts; (iii) employ forward currency
contracts; and (iv) purchase and sell structured products, which are instruments
designed to restructure or reflect the characteristics of certain other
investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Fund invests may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of the Fund to successfully utilize
these instruments may depend in part upon the ability of the Fund's advisers to
forecast these factors correctly. Inaccurate forecasts could expose the Fund to
a risk of loss. There can be no guarantee that there will be a correlation
between price movements in a hedging instrument and in the portfolio assets
being hedged. The Fund is not required to use any hedging strategies. Hedging
strategies, while reducing risk of loss, can also reduce the opportunity for
gain. Derivatives transactions not involving hedging may have speculative
characteristics, involve leverage and result in more risk to the Fund than
hedging strategies using the same instruments. There can be no assurance that a
liquid market will exist at a time when the Fund seeks to close out a
derivatives position. Activities of large traders in the futures and securities
markets involving arbitrage, "program trading," and other investment strategies
may cause price distortions in derivatives markets. In certain instances,
particularly those involving over-the-counter transactions or forward contracts,
there is a greater potential that a counterparty or broker may default. In the
event of a default, the Fund may experience a loss. For additional information
concerning derivatives, related instruments and the associated risks, see the
SAI.
Portfolio Turnover. The frequency of the Fund's portfolio transactions will
vary from year to year. The Fund's investment policies may lead to frequent
changes in investments, particularly in periods of rapidly changing market
conditions. High portoflio turnover rates would generally result in higher
transaction costs, including brokerage commissions or dealer mark-ups, and would
make it more difficult for the Fund to qualify as a registered investment
company under federal tax law. See "How Distributions are Made; Tax Information"
and "Other Information Concerning the Fund--Certain Regulatory Matters."
Limiting Investment Risks
Specific investment restrictions help the Fund limit investment risks for
its shareholders. These restrictions prohibit the Fund from: (a) with respect to
75% of its total assets, holding more than 10% of the voting securities of any
issuer or investing more than 5% of its total assets in the securities of any
one issuer (other than U.S. Government obligations); (b) investing more than 15%
of its net assets in illiquid securities (which include securities restricted as
to resale unless they are determined to be readily marketable in accordance with
procedures established by the Board of Trustees); or (c) investing more than 25%
of its total assets in any one industry. A complete description of these and
other investment policies is included in the SAI. Except for restriction (c)
above and investment policies designated as fundamental in the SAI, the Fund's
investment policies (including its investment objective) are not fundamental.
The Trustees may change any non-fundamental investment policy without
shareholder approval.
Risk Factors
The Fund does not constitute a balanced or complete investment program,
and the net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities in the Fund's portfolio. The Fund is
subject to the general risks and considerations associated with equity
investing.
For a discussion of certain other risks associated with the Fund's
additional investment activities, see "Other Investment Practices" above.
MANAGEMENT
The Fund's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the Fund
pursuant to an Investment Advisory Agreement and has overall responsibility for
investment decisions of the Fund, subject to the oversight of the Board of
Trustees. Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation,
a bank holding
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<PAGE>
company. Chase and its predecessors have over 100 years of money management
experience. For its investment advisory services to the Fund, Chase is entitled
to receive an annual fee computed daily and paid monthly based at an annual rate
equal to 0.40% of the Fund's average daily net assets. Chase is located at 270
Park Avenue, New York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Fund pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly-owned operating subsidiary of
Chase. CAM makes investment decisions for the Fund on a day-to-day basis. For
these services, CAM is entitled to receive a fee, payable by Chase from its
advisory fee, at annual rate equal to 0.20% of the Fund's average daily net
assets. CAM was recently formed for the purpose of providing discretionary
investment advisory services to institutional clients and to consolidate Chase's
investment management function. The same individuals who serve as portfolio
managers for Chase also serve as portfolio managers for CAM. CAM is located at
1211 Avenue of the Americas, New York, New York 10036.
Portfolio Manager. Karen L. Shapiro, Vice President of Chase, has been
responsible for the day-to-day management of the Fund's portfolio since joining
Chase in May 1996. Prior to joining Chase, Ms. Shapiro managed The Hanover Blue
Chip Growth Fund and was a vice president and senior portfolio manager at The
Portfolio Group Inc. and a member of its investment committee. Prior to joining
The Portfolio Group Inc., Ms. Shapiro was a portfolio manager in the personal
investment consulting department at Manufacturers Hanover Trust Company.
HOW TO PURCHASE, REDEEM AND EXCHANGE SHARES
How to Purchase Shares
Institutional Shares may be purchased through selected financial service
firms, such as broker-dealer firms and banks ("Dealers") who have entered into a
selected dealer agreement with the Fund's distributor on each business day
during which the New York Stock Exchange is open for trading ("Fund Business
Day"). Qualified investors are defined as institutions, trusts, partnerships,
corporations, qualified and other retirement plans and fiduciary accounts opened
by a bank, trust company or thrift institution which exercises investment
authority over such accounts. The Fund reserves the right to reject any purchase
order or cease offering shares for purchase at any time.
Institutional Shares are sold at their public offering price, which is
their next determined net asset value. Orders received by Dealers in proper form
prior to the New York Stock Exchange closing time are confirmed at that day's
offering price, provided the order is received by the Vista Service Center prior
to its close of business. Dealers are responsible for forwarding orders for the
purchase of shares on a timely basis. Fund shares normally will be maintained in
book entry form and share certificates will be issued only upon request.
Management reserves the right to refuse to sell shares of the Fund to any
institution.
Federal regulations require that each investor provide a certified
Taxpayer Identification Number upon opening an account.
Minimum Investments
The Fund has established a minimum initial investment amount of $1,000,000
for the purchase of Institutional Shares. There is no minimum for subsequent
investments. Purchases of Institutional Shares offered by other non-money market
Vista funds may be aggregated with purchases of Institutional Shares of the Fund
to meet the $1,000,000 minimum initial investment amount requirement.
-8-
<PAGE>
How to Redeem Shares
You may redeem all or any portion of the shares in your account at any
time at the net asset value next determined after a redemption request in proper
form is furnished by you to your Dealer and transmitted to and received by the
Vista Service Center. A wire redemption may be requested by telephone or wire to
the Vista Service Center. For telephone redemptions, call the Vista Service
Center at 1-800-622-4273.
In making redemption requests, the names of the registered shareholders on
your account and your account number must be supplied, along with any
certificates that represent shares you want to sell. The price you will receive
is the next net asset value calculated after the Fund receives your request in
proper form. In order to receive that day's net asset value, the Vista Service
Center must receive your request before the close of regular trading on the New
York Stock Exchange.
The Fund generally sends you payment for your shares by wire in federal
funds on the business day after your request is received. Under unusual
circumstances, the Fund may suspend redemptions, or postpone payment for more
than seven days, as permitted by federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request or contact your
Dealer. The Telephone Redemption Privilege is not available if you were issued
certificates for shares that remain outstanding. The Telephone Redemption
Privilege may be modified or terminated without notice.
Selling shares through your Dealer. Your Dealer must receive your request
before the close of regular trading on the New York Stock Exchange to receive
that day's net asset value. Your Dealer will be responsible for furnishing all
necessary documentation to the Vista Service Center, and may charge you for its
services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $1,000,000. In the event of any such redemption, you will
receive at least 60 days notice prior to the redemption.
How to Exchange Your Shares
You can exchange your shares for Institutional Shares of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer Institutional Shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully prior to any exchange
and retained for future reference.
For federal income tax purposes, an exchange is treated as a sale of shares
and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you
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<PAGE>
were issued certificates for shares that remain outstanding. Ask your investment
representative or the Vista Service Center for prospectuses of other Vista
funds. Shares of certain Vista funds are not available to residents of all
states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the amount or
number of exchanges or reject any exchange. In addition, any shareholder who
makes more than ten exchanges of shares involving the Fund in a year or three in
a calendar quarter will be charged a $5.00 administration fee for each such
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult the Vista Service Center before requesting an exchange.
The exchange privilege is subject to change or termination. See the SAI to find
out more about the exchange privilege.
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each Fund Business Day, by dividing the
net assets of the Fund attributable to that class by the total number of
outstanding shares of that class. Values of assets held by the Fund are
determined on the basis of their market or other fair value, as described in the
SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund distributes any net investment income at least quarterly and any
net realized capital gains at least annually. Distributions from capital gains
are made after applying any available capital loss carryovers.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares; (2) receive distributions from net
investment income in cash or by ACH to a pre-established bank account while
reinvesting capital gains distributions in additional shares; or (3) receive all
distributions in cash or by ACH. You can change your distribution option by
notifying the Vista Service Center in writing. If you do not select an option
when you open your account, all distributions will be reinvested. All
distributions not paid in cash or by ACH will be reinvested in shares of the
class on which the distributions are paid. You will receive a statement
confirming reinvestment of distributions in additional Fund shares promptly
following the quarter in which the reinvestment occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
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<PAGE>
A portion of the ordinary income dividends paid by the Fund may qualify
for the 70% dividends-received deduction for corporate shareholders.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Institutional Shares of the Fund. These services
include assisting with purchase and redemption transactions, maintaining
shareholder accounts and records, furnishing customer statements, transmitting
shareholder reports and communications to customers and other similar
shareholder liaison services. For performing these services, each shareholder
servicing agent receives an annual fee of up to 0.25% of the average daily net
assets of Institutional Shares of the Fund held by investors for whom the
shareholder servicing agent maintains a servicing relationship. Shareholder
servicing agents may subcontract with other parties for the provision of
shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator
Chase acts as administrator of the Fund and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets.
Sub-Administrator and Distributor
Vista Fund Distributors, Inc. ("VFD") acts as the Fund's sub-administrator
and distributor. VFD is a subsidiary of The BISYS Group, Inc. and is
unaffiliated with Chase. For the sub-administrative services it performs, VFD is
entitled to receive a fee from the Fund at an annual rate equal to 0.05% of the
Fund's average daily net assets. VFD has agreed to use a portion of this fee to
pay for certain expenses incurred in connection with organizing new series of
the Trust and certain other ongoing expenses of the Trust. VFD is located at 101
Park Avenue, New York, New York 10178.
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<PAGE>
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Shareholder servicing and
distribution fees are allocated to specific classes of the Fund. In addition,
the Fund may allocate transfer agency and certain other expenses by class.
Service providers to the Fund may, from time to time, voluntarily waive all or a
portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). Prior to May 6, 1996, the Fund was known as the Vista Equity Fund. The
Trust has reserved the right to create and issue additional series and classes.
Each share of a series or class represents an equal proportionate interest in
that series or class with each other share of that series or class. The shares
of each series or class participate equally in the earnings, dividends and
assets of the particular series or class. Shares have no pre-emptive or
conversion rights. Shares when issued are fully paid and non-assessable, except
as set forth below. Shareholders are entitled to one vote for each whole share
held, and each fractional share shall be entitled to a proportionate fractional
vote, except that Trust shares held in the treasury of the Trust shall not be
voted. Shares of each class of the Fund generally vote together except when
required under federal securities laws to vote separately on matters that only
affect a particular class, such as the approval of distribution plans for a
particular class.
The Fund issues multiple classes of shares. This Prospectus relates only
to Institutional Shares of the Fund, one class of shares offered by the Fund.
Institutional Shares may be purchased only by qualified investors that make an
initial investment of $1,000,000 or more. "Qualified investors" are defined as
institutions, trusts, partnerships, corporations, qualified and other retirement
plans and fiduciary accounts opened by a bank, trust company or thrift
institution which exercises investment authority over such accounts. The Fund
offers other classes of shares in addition to these classes. The categories of
investors that are eligible to purchase shares may differ for each class of Fund
shares. In addition, other classes of Fund shares may be subject to differences
in sales charge arrangements, ongoing distribution and service fee levels, and
levels of certain other expenses, which will affect the relative performance of
the different classes. Investors may call 1-800-622-4273 to obtain additional
information about other classes of shares of the Fund that are offered. Any
person entitled to receive compensation for selling or servicing shares of the
Fund may receive different levels of compensation with respect to one class of
shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
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<PAGE>
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income per share during a recent 30-day period by the
maximum public offering price per share of such class on the last day of that
period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the public offering price. Total return may also be presented for
other periods.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies.
-13-
<PAGE>
These factors should be considered when comparing the Fund's investment results
to those of other mutual funds and other investment vehicles. Quotation of
investment performance for any period when a fee waiver or expense limitation
was in effect will be greater than if the waiver or limitation had not been in
effect. The Fund's performance may be compared to other mutual funds, relevant
indices and rankings prepared by independent services. See the SAI.
-14-
<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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<PAGE>
PROSPECTUS
VISTA[SM] BOND FUND
Class A and B Shares
May 6, 1996
Investment Strategy: Income
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-34-VISTA. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary...........................................................
The expenses you might pay on your Fund investment, including examples
Fund Objective............................................................
Investment Policies.......................................................
The kinds of securities in which the Fund invests,
investment policies and techniques, and risks
Management................................................................
Chase Manhattan Bank, the Fund's adviser; Chase Asset Management,
the Fund's sub-adviser, and the individuals who manage the Fund
About Your Investment.....................................................
Alternative sales arrangements
How to Buy, Sell and Exchange Shares......................................
How the Fund Values its Shares............................................
How Distributions are Made; Tax Information...............................
How the Fund distributes its earnings, and
tax treatment related to those earnings
Other Information Concerning the Fund.....................................
Distribution plans, shareholder servicing agents, administration,
custodian, expenses, organization and regulatory matters
Performance Information...................................................
How performance is determined, stated and/or advertised
Make the Most of Your Vista Privileges....................................
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<PAGE>
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the Fund based on
expenses incurred in the most recent fiscal year. The examples show the
cumulative expenses attributable to a hypothetical $1,000 investment over
specified periods.
<TABLE>
<CAPTION>
Class A Class B
Shareholder Transaction Expenses Shares Shares
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) ............................. 4.50% None
Maximum Deferred Sales Charge
(as a percentage of the lower of original
purchase price or redemption proceeds)(*) ....................... None 5.00%
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee (after estimated waiver) 0.00%(**) 0.00%
12b-1 Fee(***) .................................................. 0.25% 0.75%
Shareholder Servicing Fee (after estimated waiver,
where indicated).............................................. 0.00%(**) 0.25%
Other Expenses .................................................. 0.65% 0.65%
---- ----
Total Fund Operating Expenses (after waivers
of fees) (**) ................................................ 0.90% 1.65%
==== ====
</TABLE>
Examples
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares(+)................ 54 72 93 151
Class B Shares:
Assuming complete
redemption at the
end of the
period(++)(+++)................ 68 85 113 175
Assuming no
redemptions (+++).............. 17 52 90 175
- -----------------------
* The maximum deferred sales charge on Class B shares applies to redemptions
during the first year after purchase; the charge generally declines by 1%
annually thereafter (except in the fourth year), reaching zero after six
years. See "How to Buy, Sell and Exchange Shares."
** Reflects current waiver arrangements to maintain Total Fund Operating
Expenses at the levels indicated in the table above. Absent such waivers,
the Investment Advisory Fee would
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<PAGE>
be 0.30% for Class A and Class B shares, the Shareholder Servicing Fee would
be 0.25% for Class A shares, and Total Fund Operating Expenses would be
1.45% and 1.95% for Class A and Class B shares, respectively.
*** Long-term shareholders in mutual funds with 12b-1 fees, such as Class A and
Class B shareholders of the Fund, may pay more than the economic equivalent
of the maximum front-end sales charge permitted by rules of the National
Association of Securities Dealers, Inc.
+ Assumes deduction at the time of purchase of the maximum sales charge.
++ Assumes deduction at the time of redemption of the maximum applicable
deferred sales charge.
+++ Ten-year figures assume conversion of Class B shares to Class A shares
at the beginning of the ninth year after purchase. See "How to Buy, Sell
and Exchange Shares."
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges and credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
-4-
<PAGE>
FUND OBJECTIVE
Vista Bond Fund seeks as high a level of income as is consistent with
reasonable risk. The Fund is not intended to be a complete investment program,
and there is no assurance it will achieve its objective.
INVESTMENT POLICIES
Investment Approach
The Fund invests primarily in a broad range of investment-grade corporate
bonds as well as other fixed-income securities. Under normal market conditions,
the Fund invests at least 65% of its assets in debt obligations of the U.S.
Government, its agencies and instrumentalities, and investment-grade fixed
income securities. Investment-grade fixed income securities are securities rated
in the category Baa or higher by Moody's Investors Service, Inc. ("Moody's"), or
BBB or higher by Standard & Poor's Corporation ("S&P") or the equivalent by
another national rating organization, and unrated securities determined by the
Fund's advisers to be of comparable quality.
In making investment decisions for the Fund, its advisers consider many
factors in addition to current yield, including preservation of capital,
maturity and yield to maturity. They will adjust the Fund's investments in
particular securities or types of debt securities based upon their appraisal of
changing economic conditions and trends. The Fund's advisers may sell one
security and purchase another security of comparable quality and maturity to
take advantage of what they believe to be short-term differentials in market
values or yield disparities.
There is no restriction on the maturity of the Fund's portfolio or any
individual portfolio security. The Fund's advisers may adjust the average
maturity of the Fund's portfolio based upon their assessment of the relative
yields available on securities of different maturities and their expectations of
future changes in interest rates.
Fixed-income securities in the Fund's portfolio may include, in any
proportion, bonds, notes, mortgage-backed securities, asset-backed securities,
government and government agency and instrumentality obligations, zero coupon
securities, convertible securities and money market instruments. The Fund will
ordinarily hold up to 10% of its net assets in very short-term obligations
(obligations with remaining maturities of 12 months or less), such as money
market instruments, repurchase agreements and short-term corporate obligations.
For temporary defensive purposes, the Fund may invest without limitation in high
quality money market instruments and repurchase agreements, which generally
carry lower yields.
The Fund is classified as a "diversified" fund under federal securities
law.
In lieu of investing directly, the Fund is authorized to seek to achieve
its objective by investing all of its investable assets in an investment company
having substantially the same investment objective and policies as the Fund.
Other Investment Practices
The Fund may also engage in the following investment practices, when
consistent with the Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI.
Money Market Instruments. The Fund may invest in cash or high-quality,
short-term money market instruments. Such instruments may include U.S.
Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Repurchase Agreements, Securities Loans and Forward Commitments. The Fund
may enter into agreements to purchase and resell securities at an agreed-upon
price and time. The Fund also has the ability to lend portfolio securities in an
amount equal to not more than 30% of its total assets to generate additional
income. These transactions must be fully collateralized at all times. The Fund
may purchase securities for delivery at a future date, which may increase its
overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date. These transactions involve
some risk to the Fund if the other party should default on its obligation and
the Fund is delayed or prevented from recovering the collateral or completing
the transaction.
Borrowings and Reverse Repurchase Agreements. The Fund may borrow money
from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Fund may also sell and
-5-
<PAGE>
simultaneously commit to repurchase a portfolio security at an agreed-upon price
and time, to avoid selling securities during unfavorable market conditions in
order to meet redemptions. Whenever the Fund enters into a reverse repurchase
agreement, it will establish a segregated account in which it will maintain
liquid assets on a daily basis in an amount at least equal to the repurchase
price (including accrued interest). The Fund would be required to pay interest
on amounts obtained through reverse repurchase agreements, which are considered
borrowings under federal securities laws.
Stand-By Commitments. The Fund may enter into put transactions, including
transactions sometimes referred to as stand-by commitments, with respect to
securities in its portfolio. In these transactions, the Fund would acquire the
right to sell a security at an agreed upon price within a specified period prior
to its maturity date. These transactions involve some risk to the Fund if the
other party should default on its obligation and the Fund is delayed or
prevented from recovering the collateral or completing the transaction.
Acquisition of puts will have the effect of increasing the cost of the
securities subject to the put and thereby reducing the yields otherwise
available from such securities.
Zero Coupon Securities, Payment-in-Kind Obligations and Stripped
Obligations. The Fund may invest in zero coupon securities issued by
governmental and private issuers. Zero coupon securities are debt securities
that do not pay regular interest payments, and instead are sold at substantial
discounts from their value at maturity. Payment-in-kind obligations are
obligations on which the interest is payable in additional securities rather
than cash. The Fund may also invest in stripped obligations, which are
separately traded principal and interest components of an underlying obligation.
The value of these instruments tends to fluctuate more in response to changes in
interest rates than the value of ordinary interest-paying debt securities with
similar maturities. The risk is greater when the period to maturity is longer.
Floating and Variable Rate Securities; Participation Certificates. The Fund
may invest in floating rate securities, whose interest rates adjust
automatically whenever a specified interest rate changes, and variable rate
securities, whose interest rates are periodically adjusted. Certain of these
instruments permit the holder to demand payment of principal and accrued
interest upon a specified number of days' notice from either the issuer or a
third party. The securities in which the Fund may invest include participation
certificates and certificates of indebtedness or safekeeping. Participation
certificates are pro rata interests in securities held by others; certificates
of indebtedness or safekeeping are documentary receipts for such original
securities held in custody by others. As a result of the variable rate nature of
these investments, the Fund's yield may decline and it may forego the
opportunity for capital appreciation during periods when interest rates decline;
however, during periods when interest rates increase, the Fund's yield may
increase and it may have reduced risk of capital depreciation. Demand features
on certain floating or variable rate securities may obligate the Fund to pay a
"tender fee" to a third party. Demand features provided by foreign banks involve
certain risks associated with foreign investments.
Inverse Floaters and Interest Rate Caps. The Fund may invest in inverse
floaters and in securities with interest rate caps. Inverse floaters are
instruments whose interest rates bear an inverse relationship to the interest
rate on another security or the value of an index, and their price may be
considerably more volatile than a fixed-rate security. Interest rate caps are
financial instruments under which payments occur if an interest rate index
exceeds a certain predetermined interest rate level, known as the cap rate,
which is tied to a specific index. These financial products will be more
volatile in price than securities which do not include such a structure.
Mortgage-Related Securities. The Fund may invest in mortgage-related
securities. Mortgage pass-through securities are securities representing
interests in "pools" of mortgages in which payments of both interest and
principal on the securities are made monthly, in effect "passing through"
monthly payments made by the individual borrowers on the residential mortgage
loans which underlie the securities. Early repayment of principal on mortgage
pass-through securities held by the Fund (due to prepayments of principal on the
underlying mortgage loans) may result in a lower rate of return when the Fund
reinvests such principal. In addition, if the Fund purchased the securities at a
premium, early repayment would cause the value of the premium to be lost. Like
other fixed-income securities, when interest rates rise the value of a
mortgage-related security generally will decline; however, when interest rates
decline, the value of mortgage-related securities with prepayment features may
not increase as much as other fixed-income securities.
Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by the
U.S. Government, or by agencies or instrumentalities of the U.S. Government
(which guarantees are supported only by the discretionary authority of the U.S.
Government to
-6-
<PAGE>
purchase the agency's obligations). Mortgage pass-through securities created by
nongovernmental issuers may be supported by various forms of insurance or
guarantees.
The Fund may also invest in investment grade Collateralized Mortgage
Obligations ("CMOs"), which are hybrid instruments with characteristics of both
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal on a CMO are paid, in most cases, monthly. CMOs
may be collateralized by whole mortgage loans but are more typically
collateralized by portfolios of mortgage pass-through securities guaranteed by
the U.S. Government or its agencies or instrumentalities. CMOs are structured
into multiple classes, with each class having a different expected average life
and/or stated maturity. Monthly payments of principal, including prepayments,
are allocated to different classes in accordance with the terms of the
instruments, and changes in prepayment rates or assumptions may significantly
affect the expected average life and value of a particular class.
The Fund expects that governmental, government-related or private entities
may create other mortgage-related securities in addition to those described
above. As new types of mortgage-related securities are developed and offered to
investors, the Fund will consider making investments in such securities.
Asset-Backed Securities. The Fund may invest in asset-backed securities,
which represent a participation in, or are secured by and payable from, a stream
of payments generated by particular assets, most often a pool of assets similar
to one another, such as motor vehicle receivables or credit card receivables.
Other Investment Companies. The Fund may invest up to 10% of its total
assets in shares of other investment companies, subject to applicable regulatory
limitations.
Derivatives and Related Instruments. The Fund may invest its assets in
derivative and related instruments to hedge various market risks or to increase
the Fund's income or gain. Some of these instruments will be subject to asset
segregation requirements to cover the Fund's obligations. The Fund may (i)
purchase, write and exercise call and put options on securities and securities
indexes (including using options in combination with securities, other options
or derivative instruments); (ii) enter into swaps, futures contracts and options
on futures contracts; (iii) employ forward interest rate contracts; (iv)
purchase and sell mortgage-backed and asset-backed securities; and (v) purchase
and sell structured products, which are instruments designed to restructure or
reflect the characteristics of certain other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Fund invests may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of the Fund to successfully utilize
these instruments may depend in part upon the ability of the Fund's advisers to
forecast these factors correctly. Inaccurate forecasts could expose the Fund to
a risk of loss. There can be no guarantee that there will be a correlation
between price movements in a hedging instrument and in the portfolio assets
being hedged. The Fund is not required to use any hedging strategies. Hedging
strategies, while reducing risk of loss, can also reduce the opportunity for
gain. Derivatives transactions not involving hedging may have speculative
characteristics, involve leverage and result in more risk to the Fund than
hedging strategies using the same instruments. There can be no assurance that a
liquid market will exist at a time when the Fund seeks to close out a
derivatives position. Activities of large traders in the futures and securities
markets involving arbitrage, "program trading," and other investment strategies
may cause price distortions in derivatives markets. In certain instances,
particularly those involving over-the-counter transactions or forward contracts,
there is a greater potential that a counterparty or broker may default. In the
event of a default, the Fund may experience a loss. For additional information
concerning derivatives, related instruments and the associated risks, see the
SAI.
Portfolio Turnover. The frequency of the Fund's portfolio transactions
will vary from year to year. The Fund's investment policies may lead to frequent
changes in investments, particularly in periods of rapidly changing market
conditions. High portfolio turnover rates would generally result in higher
transaction costs, including brokerage commissions or dealer mark-ups, and would
make it more difficult for the Fund to qualify as a registered investment
company under federal tax law. See "How Distributions are Made; Tax Information"
and "Other Information Concerning the Fund--Certain Regulatory Matters."
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Limiting Investment Risks
Specific investment restrictions help the Fund limit investment risks for
its shareholders. These restrictions prohibit the Fund from: (a) with respect to
75% of its total assets, holding more than 10% of the voting securities of any
issuer or investing more than 5% of its total assets in the securities of any
one issuer (other than U.S. Government obligations); (b) investing more than 15%
of its net assets in illiquid securities (which include securities restricted as
to resale unless they are determined to be readily marketable in accordance with
procedures established by the Board of Trustees); or (c) investing more than 25%
of its total assets in any one industry. A complete description of these and
other investment policies is included in the SAI. Except for restriction (c)
above and investment policies designated as fundamental in the SAI, the Fund's
investment policies (including its investment objectives) are not fundamental.
The Trustees may change any non-fundamental investment policy without
shareholder approval.
Risk Factors
The Fund does not constitute a balanced or complete investment program,
and the net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities in the Fund's portfolio. The Fund is
subject to the general risks and considerations associated with the types of
investments it may make, as described above, as well as the risks discussed
herein.
The performance of the Fund depends in part on interest rate changes. As
interest rates increase, the value of the fixed income securities held by the
Fund tends to decrease. This effect will be more pronounced with respect to
investments by the Fund in mortgage-related securities, the value of which are
more sensitive to interest rate changes. There is no restriction on the maturity
of the Fund's portfolio or any individual portfolio security, and to the extent
the Fund invests in securities with longer maturities, the volatility of the
Fund in response to changes in interest rates can be expected to be greater than
if the Fund had invested in comparable securities with shorter maturities. The
performance of the Fund will also depend on the quality of its investments.
While securities issued or guaranteed by the U.S. Government generally are of
high quality, the other fixed income securities in which the Fund may invest,
while of investment-grade quality, may be of lesser credit quality. Securities
rated in the category Baa by Moody's or BBB by S&P lack certain investment
characteristics and may have speculative characteristics.
For a discussion of certain other risks associated with the Fund's
additional investment activities, see "Other Investment Practices" above.
MANAGEMENT
The Fund's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the Fund
pursuant to an Investment Advisory Agreement and has overall responsibility for
investment decisions of the Fund, subject to the oversight of the Board of
Trustees. Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation,
a bank holding company. Chase and its predecessors have over 100 years of money
management experience. For its investment advisory services to the Fund, Chase
is entitled to receive an annual fee computed daily and paid monthly based at an
annual rate equal to 0.30% of the Fund's average daily net assets. Chase is
located at 270 Park Avenue, New York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Fund pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly-owned operating subsidiary of
Chase. CAM makes investment decisions for the Fund on a day-to-day basis. For
these services, CAM is entitled to receive a fee, payable by Chase from its
advisory fee, at an annual rate equal to 0.15% of the Fund's average daily net
assets. CAM was recently formed for the purpose of providing discretionary
investment advisory services to institutional clients and to consolidate Chase's
investment management function. The same individuals who serve as portfolio
managers for Chase also serve as portfolio managers for CAM. CAM is located at
1211 Avenue of the Americas, New York, New York 10036.
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Portfolio Manager. The Fund has been managed by Mark Buonaugurio, Second
Vice President of Chase, since February, 1992. For the four years prior to
managing the Fund, Mr. Buonaugurio managed fixed-income comingled trust funds,
and provided credit research services for Chase.
ABOUT YOUR INVESTMENT
Alternative Sales Arrangements
Class A shares. An investor who purchases Class A shares pays a sales
charge at the time of purchase. As a result, Class A shares are not subject to
any sales charges when they are redeemed. Certain purchases of Class A shares
qualify for reduced sales charges. Class A shares have lower combined 12b-1 and
service fees than Class B shares. See "How to Buy, Sell and Exchange Shares" and
"Other Information Concerning the Fund."
Class B shares. Class B shares are sold without an initial sales charge,
but are subject to a contingent deferred sales charge ("CDSC") if redeemed
within a specified period after purchase. Class B shares also have higher
combined 12b-1 and service fees than Class A shares.
Class B shares automatically convert into Class A shares, based on relative
net asset value, at the beginning of the ninth year after purchase. For more
information about the conversion of Class B shares, see the SAI. This discussion
will include information about how shares acquired through reinvestment of
distributions are treated for conversion purposes. Class B shares provide an
investor the benefit of putting all of the investor's dollars to work from the
time the investment is made. Until conversion, Class B shares will have a higher
expense ratio and pay lower dividends than Class A shares because of the higher
combined 12b-1 and service fees. See "How to Buy, Sell and Exchange Shares" and
"Other Information Concerning the Fund."
Which arrangement is best for you? The decision as to which class of
shares provides a more suitable investment for an investor depends on a number
of factors, including the amount and intended length of the investment.
Investors making investments that qualify for reduced sales charges might
consider class A shares. Investors who prefer not to pay an initial sales charge
might consider Class B shares. In almost all cases, investors planning to
purchase $250,000 or more of the Fund's shares will pay lower aggregate charges
and expenses by purchasing Class A shares.
HOW TO BUY, SELL AND EXCHANGE SHARES
How to Buy Shares
You can open a Fund account with as little as $2,500 ($1,000 for IRAs,
SEP-IRAs and the Systematic Investment Plan) and make additional investments at
any time with as little as $100. You can buy Fund shares three ways-through an
investment representative, through the Fund's distributor by calling the Vista
Service Center or through the Systematic Investment Plan.
All purchases made by check should be in U.S. dollars and made payable to
the Vista Funds. Third party checks, credit cards and cash will not be accepted.
The Fund reserves the right to reject any purchase order or cease offering
shares for purchase at any time. When purchases are made by check, redemptions
will not be allowed until clearance of the purchase check, which may take the 15
calendar days or longer. In addition, the redemption of shares purchased through
ACH will not be allowed until clearance of your payment, which may take 7
business days or longer.
Buying shares through the Fund's distributor. Complete and return the
enclosed application and your check in the amount you wish to invest to the
Vista Service Center.
Buying shares through systematic investing. You can make regular
investments of $100 or more per transaction through automatic periodic deduction
from your bank checking or savings account. Shareholders electing to start this
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Systematic Investment Plan when opening an account should complete Section
8 of the account application. Current shareholders may begin such a plan at any
time by sending a signed letter with signature guarantee and a deposit slip or
voided check to the Vista Service Center. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Shares are sold at the public offering price based on the net asset value
next determined after the Vista Service Center receives your order in proper
form. In most cases, in order to receive that day's public offering price, the
Vista Service Center must receive your order before the close of regular trading
on the New York Stock Exchange. If you buy shares through your investment
representative, the representative must receive your order before the close of
regular trading on the New York Stock Exchange to receive that day's public
offering price. Orders for shares are accepted by the Fund after funds are
converted to federal funds. Orders paid by check and received by 2:00 p.m.,
Eastern Time will generally be available for the purchase of shares the
following business day.
If you are considering redeeming or exchanging shares or transferring
shares to another person shortly after purchase, you should pay for those shares
with a certified check to avoid any delay in redemption, exchange or transfer.
Otherwise the Fund may delay payment until the purchase price of those shares
has been collected or, if you redeem by telephone, until 15 calendar days after
the purchase date. To eliminate the need for safekeeping, the Fund will not
issue certificates for your Class A shares unless you request them. Due to the
conversion feature of Class B shares, certificates for Class B shares will not
be issued and all Class B shares will be held in book entry form.
Class A Shares
The public offering price of Class A shares is the net asset value plus a
sales charge that varies depending on the size of your purchase. The Fund
receives the net asset value. The sales charge is allocated between your
broker-dealer and the Fund's distributor as shown in the following table, except
when the Fund's distributor, in its discretion, allocates the entire amount to
your broker-dealer.
- -------------------------------------------------------------------------------
Sales charge as a
percentage of: Amount of sales charge
Amount of transaction at Offering Net amount reallowed to dealers as a
offering price($) price invested percentage of offering price
- -------------------------------------------------------------------------------
Under 100,000 4.50 4.71 4.00
- -------------------------------------------------------------------------------
100,000 but under 250,000 3.75 3.90 3.25
- -------------------------------------------------------------------------------
250,000 but under 500,000 2.50 2.56 2.25
- -------------------------------------------------------------------------------
500,000 but under 1,000,000 2.00 2.04 1.75
- -------------------------------------------------------------------------------
There is no initial sales charge on purchases of Class A shares of $1
million or more.
The Fund's distributor pays broker-dealers commission on net sales of
Class A shares of $1 million or more based on an investor's cumulative
purchases. Such commissions are paid at the rate of 0.75% of the amount under
$2.5 million, 0.50% of the next $7.5 million, 0.25% of the next $40 million and
0.15% thereafter. The Fund's distributor may withhold such payments with respect
to short-term investments.
Class B Shares
Class B shares are sold without an initial sales charge, although a CDSC
will be imposed if you redeem shares within a specified period after purchase,
as shown in the table below. The following types of shares may be redeemed
without charge at any time: (i) shares acquired by reinvestment of distributions
and (ii) shares otherwise exempt from the CDSC, as described below. For other
shares, the amount
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of the charge is determined as a percentage of the lesser of the current market
value or the purchase price of shares being redeemed.
Year 1 2 3 4 5 6 7+ 8+
- --------------------------------------------------------------
CDSC 5% 4% 3% 3% 2% 1% 0% 0%
In determining whether a CDSC is payable on any redemption, the Fund will
first redeem shares not subject to any charge, and then shares held longest
during the CDSC period. When a share that has appreciated in value is redeemed
during the CDSC period, a CDSC is assessed only on its initial purchase price.
For information on how sales charges are calculated if you exchange your shares,
see "How to Exchange Your Shares." The Fund's distributor pays broker-dealers a
commission of 4.00% of the offering price on sales of Class B shares, and the
distributor receives the entire amount of any CDSC you pay.
General
You may be eligible to buy Class A shares at reduced sales charges.
Consult your investment representative or the Vista Service Center for details
about Vista's combined purchase privilege, cumulative quantity discount,
statement of intention, group sales plan, employee benefit plans, and other
plans. Descriptions are also included in the enclosed application and in the
SAI. In addition, sales charges will not apply to shares purchased with
redemption proceeds received within the prior ninety days from non-Vista mutual
funds on which the investor paid a front-end or contingent deferred sales
charge.
A participant-directed employee benefit plan participating in a
"multi-fund" program approved by the Board of Trustees may include amounts
invested in the other mutual funds participating in such program for purposes of
determining whether the plan may purchase Class A shares at net asset value.
These investments will also be included for purposes of the discount privileges
and programs described above.
The Fund may sell Class A shares at net asset value without an initial
sales charge to the current and retired Trustees (and their immediate families),
current and retired employees (and their immediate families) of Chase, the
Fund's distributor and transfer agent or any affiliates or subsidiaries thereof,
registered representatives and other employees (and their immediate families) of
broker-dealers having selected dealer agreements with the Fund's distributor,
employees (and their immediate families) of financial institutions having
selected dealer agreements with the Fund's distributor (or otherwise having an
arrangement with a broker-dealer or financial institution with respect to sales
of Vista fund shares) financial institution trust departments investing an
aggregate of $1 million or more in the Vista Family of Funds and clients of
certain administrators of tax-qualified plans when proceeds from repayments of
loans to participants are invested (or reinvested) in the Vista Family of Funds.
No initial sales charge will apply to the purchase of Class A shares of
the Fund by an investor seeking to invest the proceeds of a qualified retirement
plan where a portion of the plan was invested in the Vista Family of Funds, any
qualified retirement plan with 50 or more participants, or an individual
participant in a tax-qualified plan making a tax-free rollover or transfer of
assets from the plan in which Chase or an affiliate serves as trustee or
custodian of the plan or manages some portion of the plan's assets.
Purchases of Class A shares of the Fund may be made with no initial sales
charge through an investment adviser or financial planner that charges a fee for
its services. Purchases of Class A shares of the Fund may be made with no
initial sales charge (i) by an investment adviser, broker or financial planner,
provided arrangements are preapproved and purchases are placed through an
omnibus account with the Fund or (ii) by clients of such investment adviser or
financial planner who place trades for their own accounts, if such accounts are
linked to a master account of such investment adviser or financial planner on
the books and records of the broker or agent. Such purchases may be made for
retirement and deferred compensation plans and trusts used to fund those plans.
Purchases of Class A shares of the Fund may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary exercising investment discretion, provided that
appropriate notification of
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such fiduciary relationship is reported at the time of the investment to the
Fund, the Fund's distributor or the Vista Service Center.
Shareholders of record of any Vista fund as of November 30, 1990 and
certain immediate family members may purchase Class A shares of the Fund with no
initial sales charge for as long as they continue to own Class A shares of any
Vista fund, provided there is no change in account registration. Shareholders of
record of any portfolio of The Hanover Funds, Inc. or The Hanover Investment
Funds, Inc. as of May 3, 1996 and certain related investors may purchase Class A
shares of the Fund with no initial sales charge for as long as they continue to
own shares of any Vista fund following this date, provided there is no change in
account registration.
The Fund may sell Class A shares at net asset value without an initial
sales charge in connection with the acquisition by the Fund of assets of an
investment company or personal holding company. The CDSC will be waived on
redemption of Class B shares arising out of death or disability or in connection
with certain withdrawals from IRA or other retirement plans. Up to 12% of the
value of Class B shares subject to a systematic withdrawal plan may also be
redeemed each year without a CDSC, provided that the Class B account had a
minimum balance of $20,000 at the time the systematic withdrawal plan was
established. The SAI contains additional information about purchasing the Fund's
shares at reduced sales charges.
The Fund reserves the right to change any of these policies on purchases
without an initial sales charge at any time and may reject any such purchase
request.
Shareholders of other Vista funds may be entitled to exchange their shares
for, or reinvest distributions from their funds in, shares of the Fund at net
asset value.
How to Sell Shares
You can sell your shares to the Fund any day the New York Stock Exchange is
open, either directly to the Fund or through your investment representative. The
Fund will only forward redemption payments on shares for which it has collected
payment of the purchase price.
Selling shares directly to the Fund. Send a signed letter of instruction
to the Vista Service Center, along with any certificates that represent shares
you want to sell. The price you will receive is the next net asset value
calculated after the Fund receives your request in proper form, less any
applicable CDSC. In order to receive that day's net asset value, the Vista
Service Center must receive your request before the close of regular trading on
the New York Stock Exchange.
If you sell shares having a net asset value of $100,000 or more, the
signatures of registered owners or their legal representatives must be
guaranteed by a bank, broker-dealer or certain other financial institutions. See
the SAI for more information about where to obtain a signature guarantee.
If you want your redemption proceeds sent to an address other than your
address as it appears on Vista's records, a signature guarantee is required. The
Fund may require additional documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Vista Service Center for details.
The Fund generally sends you payment for your shares the business day after
your request is received, assuming the Fund has collected payment of the
purchase price of your shares. Under unusual circumstances, the Fund may
suspend redemptions, or postpone payment for more than seven days, as permitted
by federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.
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<PAGE>
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request, as described above,
or contact your investment representative. The Telephone Redemption Privilege is
not available if you were issued certificates for shares that remain
outstanding. The Telephone Redemption Privilege may be modified or terminated
without notice.
Systematic withdrawal. You can make regular withdrawals of $50 or more
($100 or more for Class B accounts) monthly, quarterly or semiannually. A
minimum account balance of $5,000 is required to establish a systematic
withdrawal plan for Class A accounts. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Selling shares through your investment representative. Your investment
representative must receive your request before the close of regular trading on
the New York Stock Exchange to receive that day's net asset value. Your
investment representative will be responsible for furnishing all necessary
documentation to the Vista Service Center, and may charge you for its services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $500 or if you purchase through the Systematic Investment
Plan and fail to meet the Fund's investment minimum within a twelve month
period. In the event of any such redemption, you will receive at least 60 days
notice prior to the redemption. In the event the Fund redeems Class B shares
pursuant to this provision, no CDSC will be imposed.
How to Exchange Your Shares
You can exchange your shares for shares of the same class of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer all classes of shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully and retained for
future reference. If you exchange shares subject to a CDSC, the transaction will
not be subject to the CDSC. However, when you redeem the shares acquired through
the exchange, the redemption may be subject to the CDSC, depending upon when you
originally purchased the shares. The CDSC will be computed using the schedule of
any fund into or from which you have exchanged your shares that would result in
your paying the highest CDSC applicable to your class of shares. In computing
the CDSC, the length of time you have owned your shares will be measured from
the date of original purchase and will not be affected by any exchange.
An exchange of Class B shares into any of the Vista money market funds
other than the Class B shares of the Vista Prime Money Market Fund will be
treated as a redemption -- and therefore subject to the conditions of the CDSC
- -- and a subsequent purchase. Class B shares of any Vista non-money market fund
may be exchanged into the Class B shares of the Vista Prime Money Market Fund in
order to continue the aging of the initial purchase of such shares.
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the
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<PAGE>
amount or number of exchanges or reject any exchange. In addition, any
shareholder who makes more than ten exchanges of shares involving the Fund in a
year or three in a calendar quarter will be charged a $5.00 administration fee
for each such exchange. Shareholders would be notified of any such action to the
extent required by law. Consult the Vista Service Center before requesting an
exchange. See the SAI to find out more about the exchange privilege.
Reinstatement privilege. Class A shareholders have a one time privilege of
reinstating their investment in the Fund at net asset value next determined
subject to written request within 90 calendar days of the redemption,
accompanied by payment for the shares (not in excess of the redemption). Class B
shareholders who have redeemed their shares and paid a CDSC with such redemption
may purchase Class A shares with no initial sales charge (in an amount not in
excess of their redemption proceeds) if the purchase occurs within 90 days of
the redemption of the Class B shares.
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each business day of the Fund, by
dividing the net assets of the Fund attributable to that class by the total
number of outstanding shares of that class. Values of assets held by the Fund
are determined on the basis of their market or other fair value, as described in
the SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund declares dividends daily and distributes any net investment income
at least monthly. The Fund distributes any net realized capital gains at least
annually. Distributions from capital gains are made after applying any available
capital loss carryovers. Distributions paid by the Fund with respect to Class A
shares will generally be greater than those paid with respect to Class B shares
because expenses attributable to Class B shares will generally be higher.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares without sales charge; (2) receive
distributions from net investment income in cash or by ACH to a pre-established
bank account while reinvesting capital gains distributions in additional shares
without a sales charge; or (3) receive all distributions in cash or by ACH. You
can change your distribution option by notifying the Vista Service Center in
writing. If you do not select an option when you open your account, all
distributions will be reinvested. All distributions not paid in cash or by ACH
will be reinvested in shares of the class on which the distributions are paid.
You will receive a statement confirming reinvestment of distributions in
additional Fund shares promptly following the quarter in which the reinvestment
occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
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Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Distribution Plans
The Fund's distributor is Vista Fund Distributors, Inc. ("VFD"). VFD is a
subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase. The Trust
has adopted Rule 12b-1 distribution plans for Class A and Class B shares which
provide that the Fund will pay distribution fees at annual rates of up to 0.25%
and 0.75% of the average daily net assets attributable to Class A and Class B
shares of the Fund, respectively. Payments under the distribution plans shall be
used to compensate or reimburse the Fund's distributor and broker-dealers for
services provided and expenses incurred in connection with the sale of Class A
and Class B shares, and are not tied to the amount of actual expenses incurred.
Payments may be used to compensate broker-dealers with trail or maintenance
commissions at an annual rate of up to 0.25% of the average daily net asset
value of Class A or Class B shares maintained in the Fund by customers of these
broker-dealers. Trail or maintenance commissions are paid to broker-dealers
beginning the 13th month following the purchase of shares by their customers.
Some activities intended to promote the sale of Class A and Class B shares will
be conducted generally by the Vista Family of Funds, and activities intended to
promote the Fund's Class A or Class B shares may also benefit the Fund's other
shares and other Vista funds.
VFD may provide promotional incentives to broker-dealers that meet
specified sales targets for one or more Vista funds. These incentives may
include gifts of up to $100 per person annually; an occasional meal, ticket to a
sporting event or theater or entertainment for broker-dealers and their guests;
and payment or reimbursement for travel expenses, including lodging and meals,
in connection with attendance at training and educational meetings within and
outside the U.S.
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Class A or Class B shares of the Fund. These
services include assisting with purchase and redemption transactions,
maintaining shareholder accounts and records, furnishing customer statements,
transmitting shareholder reports and communications to customers and other
similar shareholder liaison services. For performing these services, each
shareholder servicing agent receives an annual fee of up to 0.25% of the average
daily net assets of Class A and Class B shares of the Fund held by investors for
whom the shareholder servicing agent maintains a servicing relationship.
Shareholder servicing agents may subcontract with other parties for the
provision of shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are
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<PAGE>
already receiving other fees an amount not exceeding such other fees or the fees
for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator and Sub-Administrator
Chase acts as the Fund's administrator and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets.
VFD provides certain sub-administrative services to the Fund pursuant to a
distribution and sub-administration agreement and is entitled to receive a fee
for these services from the Fund at an annual rate equal to 0.05% of the Fund's
average daily net assets. VFD has agreed to use a portion of this fee to pay for
certain expenses incurred in connection with organizing new series of the Trust
and certain other ongoing expenses of the Trust. VFD is located at 101 Park
Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Shareholder servicing and
distribution fees are allocated to specific classes of the Fund. In addition,
the Fund may allocate transfer agency and certain other expenses by class.
Service providers to the Fund may, from time to time, voluntarily waive all or a
portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Shares have no
preemptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of the Fund generally vote
together except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class.
The Fund issues multiple classes of shares. This Prospectus relates only to
Class A and Class B shares of the Fund. The Fund offers other classes of shares
in addition to these classes. The categories of investors that are eligible to
purchase shares and minimum investment requirements may differ for each class of
Fund shares. In addition, other classes of Fund shares may be subject to
differences in sales charge arrangements, ongoing distribution and service fee
levels, and levels of certain other expenses, which will affect the relative
performance of the different classes. Investors may call 1-800-34-VISTA to
obtain additional information about other classes
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<PAGE>
of shares of the Fund that are offered. Any person entitled to receive
compensation for selling or servicing shares of the Fund may receive different
levels of compensation with respect to one class of shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income calculated pursuant to federal rules per share
during a recent 30-day period by the maximum public offering price per share of
such class on the last day of that period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the maximum public offering price (in the case of Class A shares) or
reflecting the deduction of
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<PAGE>
any applicable contingent deferred sales charge (in the case of Class B
shares). Total return may also be presented for other periods or without
reflecting sales charges. Any quotation of investment performance not reflecting
the maximum initial sales charge or contingent deferred sales charge would be
reduced if such sales charges were used.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other mutual
funds and other investment vehicles. Quotation of investment performance for any
period when a fee waiver or expense limitation was in effect will be greater
than if the waiver or limitation had not been in effect. The Fund's performance
may be compared to other mutual funds, relevant indices and rankings prepared by
independent services. See the SAI.
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<PAGE>
MAKE THE MOST OF YOUR VISTA PRIVILEGES
The following services are available to you as a Vista mutual fund shareholder.
o SYSTEMATIC INVESTMENT PLAN - Invest as much as you wish ($100 or more) in
the first or third week of any month. The amount will be automatically
transferred from your checking or savings account.
o SYSTEMATIC WITHDRAWAL - Make regular withdrawals of $50 or more ($100 or
more for Class B accounts) monthly, quarterly or semiannually. A minimum
account balance of $5,000 is required to establish a systematic withdrawal
plan for Class A accounts.
o SYSTEMATIC EXCHANGE - Transfer assets automatically from one Vista account
to another on a regular, prearranged basis. There is no additional charge
for this service.
o FREE EXCHANGE PRIVILEGE - Exchange money between Vista funds in the same
class of shares without charge. The exchange privilege allows you to adjust
your investments as your objectives change.
Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange and systematic withdrawal or exchange.
o REINSTATEMENT PRIVILEGE - Class A shareholders have a one time privilege of
reinstating their investment in the Fund at net asset value next determined
subject to written request within 90 calendar days of the redemption,
accompanied by payment for the shares (not in excess of the redemption).
Class B shareholders who have redeemed their shares and paid a CDSC with
such redemption may purchase Class A shares with no initial sales charge (in
an amount not in excess of their redemption proceeds) if the purchase occurs
within 90 days of the redemption of the Class B shares.
For more information about any of these services and privileges, call your
shareholder servicing agent, investment representative or the Vista Service
Center at 1-800-34-VISTA. These privileges are subject to change or termination.
-19-
<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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<PAGE>
PROSPECTUS
VISTA[SM] BOND FUND
Institutional Shares
May 6, 1996
Investment Strategy: Income
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-662-4273. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary........................................................
Financial Highlights...................................................
Fund Objective.........................................................
Investment Policies....................................................
Management.............................................................
How to Purchase, Redeem and Exchange Shares............................
How the Fund Values its Shares.........................................
How Distributions are Made; Tax Information............................
Other Information Concerning the Fund..................................
Performance Information................................................
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<PAGE>
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the Fund based on
expenses incurred in the most recent fiscal year. The example shows the
cumulative expenses attributable to a hypothetical $1,000 investment over
specified periods.
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee (after estimated waiver)(*)............... 0.00%
12b-1 Fee......................................................... None
Shareholder Servicing Fee (after estimated waiver)(*)............. 0.00%
Other Expenses.................................................... 0.60%
-----
Total Fund Operating Expenses (after waivers of fees)(*)........... 0.60%
=====
Example
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Year 5 Years 10 Years
------ ------ ------- --------
Institutional Shares....... $6 $19 $33 $75
- -----------------------
* Reflects current waiver arrangements to maintain Total Fund Operating
Expenses at the level indicated in the table above. Absent such waivers,
the Investment Advisory Fee and Shareholder Servicing Fee would be 0.30%
and 0.25%, respectively, and Total Fund Operating Expenses would be 1.15%.
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
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<PAGE>
FINANCIAL HIGHLIGHTS
The following information on selected per share data and ratios with
respect to each of the four fiscal periods commencing after June 30, 1992, and
the related financial statements, have been audited by Price Waterhouse LLP,
independent accountants, whose report expressed an unqualified opinion thereon.
The information on selected per share data and ratios with respect to the fiscal
year ended June 30, 1992 and the period November 30, 1990 to June 30, 1991, has
been audited by other independent accountants, whose report expressed an
unqualified opinion thereon. The following information should be read in
conjunction with the financial statements and notes thereto which are
incorporated by reference in the SAI.
<TABLE>
<CAPTION>
Vista Bond Fund
Year
Year Ended, 7/1/92** Ended 11/1/90*
-------------------------------- through ------- through
10/31/95 10/31/94 10/31/93 10/31/92 6/30/92 6/30/91
-------- -------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -------------------------------
Net Asset Value, Beginning of Period $10.08 $11.30 $10.76 $10.70 $10.14 $10.00
------ ------ ------ ------ ------ ------
Income from Investment Operations:
Net Investment Income 0.687 0.667 0.622 0.240 0.760 0.410
Net gain or (Losses) in Securities
(both realized and unrealized) 0.854 (1.140) 0.629 0.110 0.570 0.080
------ ------ ------ ------ ------ ------
Total from Investment Operations 1.541 (0.473) 1.251 0.350 1.330 0.490
------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from Net Investment
Income 0.687 0.667 0.684 0.240 0.760 0.350
Distributions from Capital Gains 0.024 0.081 0.026 0.050 0.010 0.000
------ ------ ------ ------ ------ ------
Total Distributions: 0.711 0.748 0.710 0.290 0.770 0.350
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $ 10.91 $ 10.08 $ 11.30 $ 10.76 $ 10.70 $ 10.14
------ ------ ------ ------ ------ ------
Total Return 15.83% (4.30%) 12.63% 3.36% 13.67% 4.82%
Ratios/Supplemental Data:
Net Assets, End of Period
(000 omitted) $ 57,285 $52,439 $61,155 $45,401 $41,321 $36,791
Ratio of Expenses to Average
Net Assets 0.31% 0.31% 0.31% 0.30%# 0.30% 0.29%#
Ratio of Net Investment Income
to Average Net Assets 6.56% 6.27% 6.15% 6.74%# 7.20% 7.30%#
Ratio of Expenses without waivers
and assumption of expenses
to Average Net Assets 0.87% 0.92% 0.82% 0.73%# 1.03% 1.04%#
Ratio of Net Investment Income
without waivers and assumption
of expenses to Average Net Assets 6.00% 5.66% 5.64% 6.31%# 6.47% 6.55%#
Portfolio Turnover Rate 30% 17% 20% 3% 31% 35%
</TABLE>
- -------------------------------
# Annualized.
* Commencement of operations.
** In 1992, the fund's fiscal year-end was changed from June 30 to October 31.
-4-
<PAGE>
FUND OBJECTIVE
Vista Bond Fund seeks as high a level of income as is consistent with
reasonable risk. The Fund is not intended to be a complete investment program,
and there is no assurance it will achieve its objective.
INVESTMENT POLICIES
Investment Approach
The Fund invests primarily in a broad range of investment-grade corporate
bonds as well as other fixed-income securities. Under normal market conditions,
the Fund invests at least 65% of its assets, in debt obligations of the U.S.
Government, its agencies and instrumentalities, and investment-grade fixed
income securities. Investment-grade fixed income securities are securities rated
in the category Baa or higher by Moody's Investors Service, Inc. ("Moody's"), or
BBB or higher by Standard & Poor's Corporation ("S&P") or the equivalent by
another national rating organization, and unrated securities determined by the
Fund's advisers to be of comparable quality.
In making investment decisions for the Fund, its advisers consider many
factors in addition to current yield, including preservation of capital,
maturity and yield to maturity. They will adjust the Fund's investments in
particular securities or types of debt securities based upon their appraisal of
changing economic conditions and trends. The Fund's advisers may sell one
security and purchase another security of comparable quality and maturity to
take advantage of what they believe to be short-term differentials in market
values or yield disparities.
There is no restriction on the maturity of the Fund's portfolio or any
individual portfolio security. The Fund's advisers may adjust the average
maturity of the Fund's portfolio based upon their assessment of the relative
yields available on securities of different maturities and their expectations of
future changes in interest rates.
Fixed-income securities in the Fund's portfolio may include, in any
proportion, bonds, notes, mortgage-backed securities, asset-backed securities,
government and government agency and instrumentality obligations, zero coupon
securities, convertible securities and money market instruments. The Fund will
ordinarily hold up to 10% of its net assets in very short-term obligations
(obligations with remaining maturities of 12 months or less), such as money
market instruments, repurchase agreements and short-term corporate obligations.
For temporary defensive purposes, the Fund may invest without limitation in high
quality money market instruments and repurchase agreements, which generally
carry lower yields.
The Fund is classified as a "diversified" fund under the federal securities
law.
In lieu of investing directly, the Fund is authorized to seek to achieve
its objective by investing all of its investable assets in an investment company
having substantially the same investment objective and policies as the Fund.
Other Investment Practices
The Fund may also engage in the following investment practices, when
consistent with the Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI.
Money Market Instruments. The Fund may invest in cash or high-quality,
short-term money market instruments. Such instruments may include U.S.
Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Repurchase Agreements, Securities Loans and Forward Commitments. The Fund
may enter into agreements to purchase and resell securities at an agreed-upon
price and time. The Fund also has the ability to lend portfolio securities in an
amount equal to not more than 30% of its total assets to generate additional
income. These transactions must be fully collateralized at all times. The Fund
may purchase securities for delivery at a future date, which may increase its
overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date. These transactions involve
-5-
<PAGE>
some risk to the Fund if the other party should default on its obligation and
the Fund is delayed or prevented from recovering the collateral or completing
the transaction.
Borrowings and Reverse Repurchase Agreements. The Fund may borrow money
from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Fund may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Fund enters into a reverse repurchase agreement, it
will establish a segregated account in which it will maintain liquid assets on a
daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Fund would be required to pay interest on amounts
obtained through reverse repurchase agreements, which are considered borrowings
under federal securities laws.
Stand-By Commitments. The Fund may enter into put transactions, including
transactions sometimes referred to as stand-by commitments, with respect to
securities in its portfolio. In these transactions, the Fund would acquire the
right to sell a security at an agreed upon price within a specified period prior
to its maturity date. These transactions involve some risk to the Fund if the
other party should default on its obligation and the Fund is delayed or
prevented from recovering the collateral or completing the transaction.
Acquisition of puts will have the effect of increasing the cost of the
securities subject to the put and thereby reducing the yields otherwise
available from such securities.
Zero Coupon Securities, Payment-in-Kind Obligations and Stripped
Obligations. The Fund may invest in zero coupon securities issued by
governmental and private issuers. Zero coupon securities are debt securities
that do not pay regular interest payments, and instead are sold at substantial
discounts from their value at maturity. Payment-in-kind obligations are
obligations on which the interest is payable in additional securities rather
than cash. The Fund may also invest in stripped obligations, which are
separately traded principal and interest components of an underlying obligation.
The value of these instruments tends to fluctuate more in response to changes in
interest rates than the value of ordinary interest-paying debt securities with
similar maturities. The risk is greater when the period to maturity is longer.
Floating and Variable Rate Securities; Participation Certificates. The
Fund may invest in floating rate securities, whose interest rates adjust
automatically whenever a specified interest rate changes, and variable rate
securities, whose interest rates are periodically adjusted. Certain of these
instruments permit the holder to demand payment of principal and accrued
interest upon a specified number of days' notice from either the issuer or a
third party. The securities in which the Fund may invest include participation
certificates and certificates of indebtedness or safekeeping. Participation
certificates are pro rata interests in securities held by others; certificates
of indebtedness or safekeeping are documentary receipts for such original
securities held in custody by others. As a result of the variable rate nature of
these investments, the Fund's yield may decline and it may forego the
opportunity for capital appreciation during periods when interest rates decline;
however, during periods when interest rates increase, the Fund's yield may
increase and it may have reduced risk of capital depreciation. Demand features
on certain floating or variable rate securities may obligate the Fund to pay a
"tender fee" to a third party. Demand features provided by foreign banks involve
certain risks associated with foreign investments.
Inverse Floaters and Interest Rate Caps. The Fund may invest in inverse
floaters and in securities with interest rate caps. Inverse floaters are
instruments whose interest rates bear an inverse relationship to the interest
rate on another security or the value of an index, and their price may be
considerably more volatile than a fixed-rate security. Interest rate caps are
financial instruments under which payments occur if an interest rate index
exceeds a certain predetermined interest rate level, known as the cap rate,
which is tied to a specific index. These financial products will be more
volatile in price than securities which do not include such a structure.
Mortgage-Related Securities. The Fund may invest in mortgage-related
securities. Mortgage pass-through securities are securities representing
interests in "pools" of mortgages in which payments of both interest and
principal on the securities are made monthly, in effect "passing through"
monthly payments made by the individual borrowers on the residential mortgage
loans which underlie the securities. Early repayment of principal on mortgage
pass-through securities held by the Fund (due to prepayments of principal on the
underlying mortgage
-6-
<PAGE>
loans) may result in a lower rate of return when the Fund reinvests such
principal. In addition, if the Fund purchased the securities at a premium, early
repayment would cause the value of the premium to be lost. Like other
fixed-income securities, when interest rates rise the value of a
mortgage-related security generally will decline; however, when interest rates
decline, the value of mortgage-related securities with prepayment features may
not increase as much as other fixed-income securities.
Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by the
U.S. Government, or by agencies or instrumentalities of the U.S. Government
(which guarantees are supported only by the discretionary authority of the U.S.
Government to purchase the agency's obligations). Mortgage pass-through
securities created by nongovernmental issuers may be supported by various forms
of insurance or guarantees.
The Fund may also invest in investment grade Collateralized Mortgage
Obligations ("CMOs"), which are hybrid instruments with characteristics of both
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal on a CMO are paid, in most cases, monthly. CMOs
may be collateralized by whole mortgage loans but are more typically
collateralized by portfolios of mortgage pass-through securities guaranteed by
the U.S. Government or its agencies or instrumentalities. CMOs are structured
into multiple classes, with each class having a different expected average life
and/or stated maturity. Monthly payments of principal, including prepayments,
are allocated to different classes in accordance with the terms of the
instruments, and changes in prepayment rates or assumptions may significantly
affect the expected average life and value of a particular class.
The Fund expects that governmental, government-related or private entities
may create other mortgage-related securities in addition to those described
above. As new types of mortgage-related securities are developed and offered to
investors, the Fund will consider making investments in such securities.
Asset-Backed Securities. The Fund may invest in asset-backed securities,
which represent a participation in, or are secured by and payable from, a stream
of payments generated by particular assets, most often a pool of assets similar
to one another, such as motor vehicle receivables or credit card receivables.
Other Investment Companies. The Fund may invest up to 10% of its total
assets in shares of other investment companies, subject to applicable regulatory
limitations.
Derivatives and Related Instruments. The Fund may invest its assets in
derivative and related instruments to hedge various market risks or to increase
the Fund's income or gain. Some of these instruments will be subject to asset
segregation requirements to cover the Fund's obligations. The Fund may (i)
purchase, write and exercise call and put options on securities and securities
indexes (including using options in combination with securities, other options
or derivative instruments); (ii) enter into swaps, futures contracts and options
on futures contracts; (iii) employ forward interest rate contracts; (iv)
purchase and sell mortgage-backed and asset-backed securities; and (v) purchase
and sell structured products, which are instruments designed to restructure or
reflect the characteristics of certain other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Fund invests may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of the Fund to successfully utilize
these instruments may depend in part upon the ability of the Fund's advisers to
forecast these factors correctly. Inaccurate forecasts could expose the Fund to
a risk of loss. There can be no guarantee that there will be a correlation
between price movements in a hedging instrument and in the portfolio assets
being hedged. The Fund is not required to use any hedging strategies. Hedging
strategies, while
-7-
<PAGE>
reducing risk of loss, can also reduce the opportunity for gain. Derivatives
transactions not involving hedging may have speculative characteristics, involve
leverage and result in more risk to the Fund than hedging strategies using the
same instruments. There can be no assurance that a liquid market will exist at a
time when the Fund seeks to close out a derivatives position. Activities of
large traders in the futures and securities markets involving arbitrage,
"program trading," and other investment strategies may cause price distortions
in derivatives markets. In certain instances, particularly those involving
over-the-counter transactions or forward contracts, there is a greater potential
that a counterparty or broker may default. In the event of a default, the Fund
may experience a loss. For additional information concerning derivatives,
related instruments and the associated risks, see the SAI.
Portfolio Turnover. The frequency of the Fund's portfolio transactions
will vary from year to year. The Fund's investment policies may lead to frequent
changes in investments, particularly in periods of rapidly changing market
conditions. High portfolio turnover rates would generally result in higher
transaction costs, including brokerage commissions or dealer mark-ups, and would
make it more difficult for the Fund to qualify as a registered investment
company under federal tax law. See "How Distributions are Made; Tax Information"
and "Other Information Concerning the Fund--Certain Regulatory Matters."
Limiting Investment Risks
Specific investment restrictions help the Fund limit investment risks for
its shareholders. These restrictions prohibit the Fund from: (a) with respect to
75% of its total assets, holding more than 10% of the voting securities of any
issuer or investing more than 5% of its total assets in the securities of any
one issuer (other than U.S. Government obligations); (b) investing more than 15%
of its net assets in illiquid securities (which include securities restricted as
to resale unless they are determined to be readily marketable in accordance with
procedures established by the Board of Trustees); or (c) investing more than 25%
of its total assets in any one industry. A complete description of these and
other investment policies is included in the SAI. Except for restriction (c)
above and investment policies designated as fundamental in the SAI, the Fund's
investment policies (including its investment objective) are not fundamental.
The Trustees may change any non-fundamental investment policy without
shareholder approval.
Risk Factors
The Fund does not constitute a balanced or complete investment program,
and the net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities in the Fund's portfolio. The Fund is
subject to the general risks and considerations associated with the types of
investments it may make, as described above, as well as the risks discussed
herein.
The performance of the Fund depends in part on interest rate changes. As
interest rates increase, the value of the fixed income securities held by the
Fund tends to decrease. This effect will be more pronounced with respect to
investments by the Fund in mortgage-related securities, the values of which are
more sensitive to interest rate changes. There is no restriction on the maturity
of the Fund's portfolio or any individual portfolio security, and to the extent
the Fund invests in securities with longer maturities, the volatility of the
Fund in response to changes in interest rates can be expected to be greater than
if the Fund had invested in comparable securities with shorter maturities. The
performance of the Fund will also depend on the quality of its investments.
While securities issued or guaranteed by the U.S. Government generally are of
high quality, the other fixed income securities in which the Fund may invest,
while of investment-grade quality, may be of lesser credit quality. Securities
rated in the category Baa by Moody's or BBB by S&P lack certain investment
characteristics and may have speculative characteristics.
For a discussion of certain other risks associated with the Fund's
additional investment activities, see "Other Investment Practices" above.
-8-
<PAGE>
MANAGEMENT
The Fund's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the Fund
pursuant to an Investment Advisory Agreement and has overall responsibility for
investment decisions of the Fund, subject to the oversight of the Board of
Trustees. Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation,
a bank holding company. Chase and its predecessors have over 100 years of money
management experience. For its investment advisory services to the Fund, Chase
is entitled to receive an annual fee computed daily and paid monthly based at an
annual rate equal to 0.30% of the Fund's average daily net assets. Chase is
located at 270 Park Avenue, New York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Fund pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly-owned operating subsidiary of
Chase. CAM makes investment decisions for the Fund on a day-to-day basis. For
these services, CAM is entitled to receive a fee, payable by Chase from its
advisory fee, at an annual rate equal to 0.15% of the Fund's average daily net
assets. CAM was recently formed for the purpose of providing discretionary
investment advisory services to institutional clients and to consolidate Chase's
investment management function. The same individuals who serve as portfolio
managers for Chase also serve as portfolio managers for CAM. CAM is located at
1211 Avenue of the Americas, New York, New York 10036.
Portfolio Manager. The Fund has been managed by Mark Buonaugurio, Second
Vice President of Chase, since February, 1992. For the four years prior to
managing the Fund, Mr. Buonaugurio managed fixed-income comingled trust funds,
and provided credit research services for Chase.
HOW TO PURCHASE, REDEEM AND EXCHANGE SHARES
How to Purchase Shares
Institutional Shares may be purchased through selected financial service
firms, such as broker-dealer firms and banks ("Dealers") who have entered into a
selected dealer agreement with the Fund's distributor on each business day
during which the New York Stock Exchange is open for trading ("Fund Business
Day"). Qualified investors are defined as institutions, trusts, partnerships,
corporations, qualified and other retirement plans and fiduciary accounts opened
by a bank, trust company or thrift institution which exercises investment
authority over such accounts. The Fund reserves the right to reject any purchase
order or cease offering shares for purchase at any time.
Institutional Shares are sold at their public offering price, which is
their next determined net asset value. Orders received by Dealers in proper form
prior to the New York Stock Exchange closing time are confirmed at that day's
offering price, provided the order is received by the Vista Service Center prior
to its close of business. Dealers are responsible for forwarding orders for the
purchase of shares on a timely basis. Fund shares normally will be maintained in
book entry form and share certificates will be issued only upon request.
Management reserves the right to refuse to sell shares of the Fund to any
institution.
Federal regulations require that each investor provide a certified
Taxpayer Identification Number upon opening an account.
Minimum Investments
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The Fund has established a minimum initial investment amount of $1,000,000
for the purchase of Institutional Shares. There is no minimum for subsequent
investments. Purchases of Institutional Shares offered by other non-money market
Vista funds may be aggregated with purchases of Institutional Shares of the Fund
to meet the $1,000,000 minimum initial investment amount requirement.
How to Redeem Shares
You may redeem all or any portion of the shares in your account at any
time at the net asset value next determined after a redemption request in proper
form is furnished by you to your Dealer and transmitted to and received by the
Vista Service Center. A wire redemption may be requested by telephone or wire to
the Vista Service Center. For telephone redemptions, call the Vista Service
Center at 1-800-622-4273.
In making redemption requests, the names of the registered shareholders on
your account and your account number must be supplied, along with any
certificates that represent shares you want to sell. The price you will receive
is the next net asset value calculated after the Fund receives your request in
proper form. In order to receive that day's net asset value, the Vista Service
Center must receive your request before the close of regular trading on the New
York Stock Exchange.
The Fund generally sends you payment for your shares by wire in federal
funds on the business day after your request is received. Under unusual
circumstances, the Fund may suspend redemptions, or postpone payment for more
than seven days, as permitted by federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request or contact your
Dealer. The Telephone Redemption Privilege is not available if you were issued
certificates for shares that remain outstanding. The Telephone Redemption
Privilege may be modified or terminated without notice.
Selling shares through your Dealer. Your Dealer must receive your request
before the close of regular trading on the New York Stock Exchange to receive
that day's net asset value. Your Dealer will be responsible for furnishing all
necessary documentation to the Vista Service Center, and may charge you for its
services.
Redemption of accounts of less than $1,000,000. The Fund may involuntarily
redeem your shares if at such time the aggregate net asset value of the shares
in your account is less than $1,000,000. In the event of any such redemption,
you will receive at least 60 days notice prior to the redemption.
How to Exchange Your Shares
You can exchange your shares for Institutional Shares of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer Institutional Shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully prior to any exchange
and retained for future reference.
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<PAGE>
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the amount or
number of exchanges or reject any exchange. In addition, any shareholder who
makes more than ten exchanges of shares involving the Fund in a year or three in
a calendar quarter will be charged a $5.00 administration fee for each such
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult the Vista Service Center before requesting an exchange.
The exchange privilege is subject to change or termination. See the SAI to find
out more about the exchange privilege.
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each Fund Business Day, by dividing the
net assets of the Fund attributable to that class by the total number of
outstanding shares of that class. Values of assets held by the Fund are
determined on the basis of their market or other fair value, as described in the
SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund declares dividends daily and distributes any net investment
income at least monthly. The Fund distributes any net realized capital gains at
least annually. Distributions from capital gains are made after applying any
available capital loss carryover.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares; (2) receive distributions from net
investment income in cash or by ACH to a pre-established bank account while
reinvesting capital gains distributions in additional shares; or (3) receive all
distributions in cash or by ACH. You can change your distribution option by
notifying the Vista Service Center in writing. If you do not select an option
when you open your account, all distributions will be reinvested. All
distributions not paid in cash or by ACH will be reinvested in shares of the
class on which the distributions are paid. You will receive a statement
confirming reinvestment of distributions in additional Fund shares promptly
following the quarter in which the reinvestment occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income
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<PAGE>
on a current basis. If the Fund does not qualify as a regulated investment
company for any taxable year or does not make such distributions, the Fund will
be subject to tax on all of its income and gains.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Institutional Shares of the Fund. These services
include assisting with purchase and redemption transactions, maintaining
shareholder accounts and records, furnishing customer statements, transmitting
shareholder reports and communications to customers and other similar
shareholder liaison services. For performing these services, each shareholder
servicing agent receives an annual fee of up to 0.25% of the average daily net
assets of Institutional Shares of the Fund held by investors for whom the
shareholder servicing agent maintains a servicing relationship. Shareholder
servicing agents may subcontract with other parties for the provision of
shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator
Chase acts as administrator of the Fund and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets.
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<PAGE>
Sub-Administrator and Distributor
Vista Fund Distributors, Inc. ("VFD") acts as the Fund's sub-administrator
and distributor. VFD is a subsidiary of The BISYS Group, Inc. and is
unaffiliated with Chase. For the sub-administrative services it performs, VFD is
entitled to receive a fee from the Fund at an annual rate equal to 0.05% of the
Fund's average daily net assets. VFD has agreed to use a portion of this fee to
pay for certain expenses incurred in connection with organizing new series of
the Trust and certain other ongoing expenses of the Trust. VFD is located at 101
Park Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Shareholder servicing and
distribution fees are allocated to specific classes of the Fund. In addition,
the Fund may allocate transfer agency and certain other expenses by class.
Service providers to the Fund may, from time to time, voluntarily waive all or a
portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Shares have no
pre-emptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of the Fund generally vote
together except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class.
The Fund issues multiple classes of shares. This Prospectus relates only
to Institutional Shares of the Fund, one class of shares offered by the Fund.
Institutional Shares may be purchased only by qualified investors that make an
initial investment of $1,000,000 or more. "Qualified investors" are defined as
institutions, trusts, partnerships, corporations, qualified and other retirement
plans and fiduciary accounts opened by a bank, trust company or thrift
institution which exercises investment authority over such accounts. The Fund
offers other classes of shares in addition to these classes. The categories of
investors that are eligible to purchase shares may differ for each class of Fund
shares. In addition, other classes of Fund shares may be subject to differences
in sales charge arrangements, ongoing distribution and service fee levels, and
levels of certain other expenses, which will affect
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<PAGE>
the relative performance of the different classes. Investors may call
1-800-622-4273 to obtain additional information about other classes of shares
of the Fund that are offered. Any person entitled to receive compensation for
selling or servicing shares of the Fund may receive different levels of
compensation with respect to one class of shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
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PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income per share during a recent 30-day period by the
maximum public offering price per share of such class on the last day of that
period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the public offering price. Total return may also be presented for
other periods.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other mutual
funds and other investment vehicles. Quotation of investment performance for any
period when a fee waiver or expense limitation was in effect will be greater
than if the waiver or limitation had not been in effect. The Fund's performance
may be compared to other mutual funds, relevant indices and rankings prepared by
independent services. See the SAI.
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<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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PROSPECTUS
VISTA[SM] SHORT-TERM BOND FUND
Class A Shares
May 6, 1996
Investment Strategy: Income
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-34-VISTA. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary..........................................................
The expenses you might pay on your Fund investment, including examples
Fund Objective...........................................................
Investment Policies......................................................
The kinds of securities in which the Fund invests,
investment policies and techniques, and risks
Management...............................................................
Chase Manhattan Bank, the Fund's adviser; Chase Asset Management,
the Fund's sub-adviser, and the individuals who manage the Fund
How to Buy, Sell and Exchange Shares.....................................
How the Fund Values its Shares...........................................
How Distributions are Made; Tax Information..............................
How the Fund distributes its earnings, and
tax treatment related to those earnings
Other Information Concerning the Fund....................................
Distribution plans, shareholder servicing agents, administration,
custodian, expenses, organization and regulatory matters
Performance Information..................................................
How performance is determined, stated and/or advertised
Make the Most of Your Vista Privileges...................................
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EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in Class A shares of the
Fund based on expenses incurred in the most recent fiscal year. The examples
show the cumulative expenses attributable to a hypothetical $1,000 investment
over specified periods.
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price).......................... 1.50%
Maximum Deferred Sales Charge
(as a percentage of the lower of original
purchase price or redemption proceeds)....................... None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee (after estimated waiver)(*).......... 0.00%
12b-1 Fee (after estimated waiver) (*)(**)................... 0.08%
Shareholder Servicing Fee.................................... 0.25%
Other Expenses (after estimated waiver)(*)................... 0.42%
-----
Total Fund Operating Expenses (after waivers of fees)(*)..... 0.75%
=====
Example
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares(+)................ $23 $39 $56 $107
- -----------------------
* Reflects current waiver arrangements to maintain Total Fund Operating
Expenses at the level indicated in the table above. Absent such waivers,
the Investment Advisory Fee, 12b-1 Fee, and Other Expenses would be 0.25%,
0.25% and 0.50%, respectively, and Total Fund Operating Expenses would be
1.25%. Chase has agreed voluntarily to waive fees payable to it and/or
reimburse expenses for a period of at least one year to the extent
necessary to prevent Total Fund Operating Expenses of Class A shares of
the Fund for such period from exceeding the amount indicated in the table.
** Long-term shareholders in mutual funds with 12b-1 fees, such as Class A
shareholders of the Fund, may pay more than the economic equivalent of the
maximum front-end sales charge permitted by rules of the National
Association of Securities Dealers, Inc.
+ Assumes deduction at the time of purchase of the maximum sales charge.
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<PAGE>
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
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<PAGE>
FUND OBJECTIVE
Vista Short Term Bond Fund seeks a high level of current income,
consistent with preservation of capital. The Fund is not intended to be a
complete investment program, and there is no assurance it will achieve its
objective.
INVESTMENT POLICIES
Investment Approach
The Fund will invest at least 65% of its net assets in bonds which have a
maturity of less than three years, and the dollar weighted average maturity of
its portfolio will not exceed three years. The Fund normally will invest
substantially all of its assets in investment-grade fixed-income securities of
all types. The maturity of the securities with put features will be measured
based on the next put date, and the maturity of mortgage- and asset-backed
securities will be measured based upon their weighted average lives.
Investment-grade fixed-income securities are securities rated in the category
Baa or higher by Moody's Investors Service, Inc. ("Moody's"), or BBB or higher
by Standard & Poor's Corporation ("S&P") or the equivalent by another national
rating organization, and unrated securities determined by the Fund's advisers to
be of comparable quality.
In making investment decisions for the Fund, its advisers consider many
factors in addition to current yield, including preservation of capital,
maturity and yield to maturity. They will adjust the Fund's investments in
particular securities or types of securities based upon their appraisal of
changing economic conditions and trends. The Fund's advisers may sell one
security and purchase another security of comparable quality and maturity to
take advantage of what they believe to be short-term differentials in market
values or yield disparities.
Fixed-income securities in the Fund's portfolio may include, in any
proportion, bonds, notes, mortgage-backed securities, asset-backed securities,
government and government agency obligations, zero coupon securities,
convertible securities and money market instruments, as discussed below.
The Fund is classified as a "diversified" fund under federal securities
law.
In lieu of investing directly, the Fund is authorized to seek to achieve
its objective by investing all of its investable assets in an investment company
having substantially the same investment objective and policies as the Fund.
Other Investment Practices
The Fund may also engage in the following investment practices, when
consistent with the Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI.
Money Market Instruments. The Fund may invest in cash or high-quality,
short-term money market instruments. Such instruments may include U.S.
Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Repurchase Agreements, Securities Loans and Forward Commitments. The Fund
may enter into agreements to purchase and resell securities at an agreed-upon
price and time. The Fund also has the ability to lend portfolio securities in an
amount equal to not more than 30% of its total assets to generate additional
income. These transactions must be fully collateralized at all times. The Fund
may purchase securities for delivery at a future date, which may increase its
overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date. These transactions involve
some risk to the Fund if the other party should default on its obligation and
the Fund is delayed or prevented from recovering the collateral or completing
the transaction.
Borrowings and Reverse Repurchase Agreements. The Fund may borrow money
from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Fund may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Fund enters into a reverse repurchase agreement, it
will establish a segregated account in which it will maintain liquid assets on a
daily basis
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in an amount at least equal to the repurchase price (including accrued
interest). The Fund would be required to pay interest on amounts obtained
through reverse repurchase agreements, which are considered borrowings under
federal securities laws.
Stand-By Commitments. The Fund may enter into put transactions, including
transactions sometimes referred to as stand-by commitments, with respect to
securities in its portfolio. In these transactions, the Fund would acquire the
right to sell a security at an agreed upon price within a specified period prior
to its maturity date. These transactions involve some risk to the Fund if the
other party should default on its obligation and the Fund is delayed or
prevented from recovering the collateral or completing the transaction.
Acquisition of puts will have the effect of increasing the cost of the
securities subject to the put and thereby reducing the yields otherwise
available from such securities.
Zero Coupon Securities, Payment-in-Kind Obligations and Stripped
Obligations. The Fund may invest in zero coupon securities issued by
governmental and private issuers. Zero coupon securities are debt securities
that do not pay regular interest payments, and instead are sold at substantial
discounts from their value at maturity. Payment-in-kind obligations are
obligations on which the interest is payable in additional securities rather
than cash. The Fund may also invest in stripped obligations, which are
separately traded principal and interest components of an underlying obligation.
The value of these instruments tends to fluctuate more in response to changes in
interest rates than the value of ordinary interest-paying debt securities with
similar maturities. The risk is greater when the period to maturity is longer.
Floating and Variable Rate Securities; Participation Certificates. The
Fund may invest in floating rate securities, whose interest rates adjust
automatically whenever a specified interest rate changes, and variable rate
securities, whose interest rates are periodically adjusted. Certain of these
instruments permit the holder to demand payment of principal and accrued
interest upon a specified number of days' notice from either the issuer or a
third party. The securities in which the Fund may invest include participation
certificates and certificates of indebtedness or safekeeping. Participation
certificates are pro rata interests in securities held by others; certificates
of indebtedness or safekeeping are documentary receipts for such original
securities held in custody by others. As a result of the variable rate nature of
these investments, the Fund's yield may decline and it may forego the
opportunity for capital appreciation during periods when interest rates decline;
however, during periods when interest rates increase, the Fund's yield may
increase and it may have reduced risk of capital depreciation. Demand features
on certain floating or variable rate securities may obligate the Fund to pay a
"tender fee" to a third party. Demand features provided by foreign banks involve
certain risks associated with foreign investments.
Inverse Floaters and Interest Rate Caps. The Fund may invest in inverse
floaters and in securities with interest rate caps. Inverse floaters are
instruments whose interest rates bear an inverse relationship to the interest
rate on another security or the value of an index, and their price may be
considerably more volatile than a fixed-rate security. Interest rate caps are
financial instruments under which payments occur if an interest rate index
exceeds a certain predetermined interest rate level, known as the cap rate,
which is tied to a specific index. These financial products will be more
volatile in price than securities which do not include such a structure.
Mortgage-Related Securities. The Fund may invest in mortgage-related
securities. Mortgage pass-through securities are securities representing
interests in "pools" of mortgages in which payments of both interest and
principal on the securities are made monthly, in effect "passing through"
monthly payments made by the individual borrowers on the residential mortgage
loans which underlie the securities. Early repayment of principal on mortgage
pass-through securities held by the Fund (due to prepayments of principal on the
underlying mortgage loans) may result in a lower rate of return when the Fund
reinvests such principal. In addition, if the Fund purchased the securities at a
premium, early repayment would cause the value of the premium to be lost. Like
other fixed-income securities, when interest rates rise the value of a
mortgage-related security generally will decline; however, when interest rates
decline, the value of mortgage-related securities with prepayment features may
not increase as much as other fixed-income securities.
Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by the
U.S. Government, or by agencies or instrumentalities of the
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U.S. Government (which guarantees are supported only by the discretionary
authority of the U.S. Government to purchase the agency's obligations). Mortgage
pass-through securities created by nongovernmental issuers may be supported by
various forms of insurance or guarantees.
The Fund may also invest in investment grade Collateralized Mortgage
Obligations ("CMOs"), which are hybrid instruments with characteristics of both
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal on a CMO are paid, in most cases, monthly. CMOs
may be collateralized by whole mortgage loans but are more typically
collateralized by portfolios of mortgage pass-through securities guaranteed by
the U.S. Government or its agencies or instrumentalities. CMOs are structured
into multiple classes, with each class having a different expected average life
and/or stated maturity. Monthly payments of principal, including prepayments,
are allocated to different classes in accordance with the terms of the
instruments, and changes in prepayment rates or assumptions may significantly
affect the expected average life and value of a particular class.
The Fund expects that governmental, government-related or private entities
may create other mortgage-related securities in addition to those described
above. As new types of mortgage-related securities are developed and offered to
investors, the Fund will consider making investments in such securities.
Asset-Backed Securities. The Fund may invest in asset-backed securities,
which represent a participation in, or are secured by and payable from, a stream
of payments generated by particular assets, most often a pool of assets similar
to one another, such as motor vehicle receivables or credit card receivables.
Other Investment Companies. The Fund may invest up to 10% of its total
assets in shares of other investment companies, subject to applicable regulatory
limitations.
Derivatives and Related Instruments. The Fund may invest its assets in
derivative and related instruments to hedge various market risks or to increase
the Fund's income or gain. Some of these instruments will be subject to asset
segregation requirements to cover the Fund's obligations. The Fund may (i)
purchase, write and exercise call and put options on securities and securities
indexes (including using options in combination with securities, other options
or derivative instruments); (ii) enter into swaps, futures contracts and options
on futures contracts; (iii) employ forward interest rate contracts; (iv)
purchase and sell mortgage-backed and asset-backed securities; and (v) purchase
and sell structured products, which are instruments designed to restructure or
reflect the characteristics of certain other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Fund invests may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of the Fund to successfully utilize
these instruments may depend in part upon the ability of the Fund's advisers to
forecast these factors correctly. Inaccurate forecasts could expose the Fund to
a risk of loss. There can be no guarantee that there will be a correlation
between price movements in a hedging instrument and in the portfolio assets
being hedged. The Fund is not required to use any hedging strategies. Hedging
strategies, while reducing risk of loss, can also reduce the opportunity for
gain. Derivatives transactions not involving hedging may have speculative
characteristics, involve leverage and result in more risk to the Fund than
hedging strategies using the same instruments. There can be no assurance that a
liquid market will exist at a time when the Fund seeks to close out a
derivatives position. Activities of large traders in the futures and securities
markets involving arbitrage, "program trading," and other investment strategies
may cause price distortions in derivatives markets. In certain instances,
particularly those involving over-the-counter transactions or forward contracts,
there is a greater potential that a counterparty or broker may default. In the
event of a default, the Fund may experience a loss. For additional information
concerning derivatives, related instruments and the associated risks, see the
SAI.
Portfolio Turnover. The frequency of the Fund's portfolio transactions
will vary from year to year. The Fund's investment policies may lead to frequent
changes in investments, particularly in periods of rapidly changing market
conditions. High portfolio turnover rates would generally result in higher
transaction costs, including brokerage commissions or dealer mark-ups, and would
make it more difficult for the Fund to qualify as a registered investment
company under federal tax law. See "How Distributions are Made; Tax Information"
and "Other Information Concerning the Fund--Certain Regulatory Matters."
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Limiting Investment Risks
Specific investment restrictions help the Fund limit investment risks for
its shareholders. These restrictions prohibit the Fund from: (a) with respect to
75% of its total assets, holding more than 10% of the voting securities of any
issuer or investing more than 5% of its total assets in the securities of any
one issuer (other than U.S. Government obligations); (b) investing more than 15%
of its net assets in illiquid securities (which include securities restricted as
to resale unless they are determined to be readily marketable in accordance with
procedures established by the Board of Trustees); or (c) investing more than 25%
of its total assets in any one industry. A complete description of these and
other investment policies is included in the SAI. Except for the Fund's
investment objective, restriction (c) above and investment policies designated
as fundamental in the SAI, the Fund's investment policies are not fundamental.
The Trustees may change any non-fundamental investment policy without
shareholder approval.
Risk Factors
The Fund does not constitute a balanced or complete investment program,
and the net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities in the Fund's portfolio. The Fund is
subject to the general risks and considerations associated with the types of
investments it may make, as described above, as well as the risks discussed
herein.
The performance of the Fund depends in part on interest rate changes. As
interest rates increase, the value of the fixed income securities held by the
Fund tends to decrease. This effect will be more pronounced with respect to
investments by the Fund in mortgage-related securities, the value of which are
more sensitive to interest rate changes. Although the Fund invests at least 65%
of its assets in bonds which have a maturity of less than three years, to the
extent the Fund invests in securities with longer maturities, the volatility of
the Fund in response to changes in interest rates can be expected to be greater
than if the Fund had invested in comparable securities with shorter maturities.
The performance of the Fund will also depend on the quality of its investments.
While U.S. Government securities generally are of high quality, government
securities that are not backed by the full faith and credit of the U.S. Treasury
may be affected by changes in the creditworthiness of the agency that issued
them and the non-U.S. Government securities held by the Fund, while of
investment-grade quality, may be of lesser credit quality. Securities rated in
the category Baa by Moody's or BBB by S&P lack certain investment
characteristics and may have speculative characteristics.
For a discussion of certain other risks associated with the Fund's
additional investment activities, see "Other Investment Practices" above.
MANAGEMENT
The Fund's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the Fund
pursuant to an Investment Advisory Agreement and has overall responsibility for
investment decisions of the Fund, subject to the oversight of the Board of
Trustees. Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation,
a bank holding company. Chase and its predecessors have over 100 years of money
management experience. For its investment advisory services to the Fund, Chase
is entitled to receive an annual fee computed daily and paid monthly based at an
annual rate equal to 0.25% of the Fund's average daily net assets. Chase is
located at 270 Park Avenue, New York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Fund pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly-owned
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operating subsidiary of Chase. CAM makes investment decisions for the Fund on a
day-to-day basis. For these services, CAM is entitled to receive a fee, payable
by Chase from its advisory fee, at an annual rate equal to 0.10% of the Fund's
average daily net assets. CAM was recently formed for the purpose of providing
discretionary investment advisory services to institutional clients and to
consolidate Chase's investment management function. The same individuals who
serve as portfolio managers for Chase also serve as portfolio managers for CAM.
CAM is located at 1211 Avenue of the Americas, New York, New York 10036.
Portfolio Manager. Linda Struble, Vice President of Chase and the manager
of Chase's fixed income trading unit, is responsible for day-to-day management
of the Fund's portfolio. Ms. Struble has managed the Fund's portfolio since its
inception on November 30, 1990 and has been with Chase since 1968 performing
various investment services, including managing individual accounts.
HOW TO BUY, SELL, AND EXCHANGE SHARES
How to Buy Shares.
You can open a Fund account with as little as $2,500 ($1,000 for IRAs,
SEP-IRAs and the Systematic Investment Plan) and make additional investments at
any time with as little as $100. You can buy Fund shares three ways--through an
investment representative, through the Fund's distributor, or through the
Systematic Investment Plan.
All purchases made by check should be in U.S. dollars and made payable to
the Vista Funds. Third party checks, credit cards and cash will not be accepted.
The Fund reserves the right to reject any purchase order or cease offering
shares for purchase at any time. When purchases are made by check, redemptions
will not be allowed until clearance of the purchase check, which may take 15
calendar days or longer. In addition, the redemption of shares purchased through
ACH will not be allowed until clearance of your payment, which may take 7
business days or longer.
Buying shares through the Fund's distributor. Complete and return the
enclosed application and your check in the amount you wish to invest to the
Vista Service Center.
Buying shares through systematic investing. You can make regular
investments of $100 or more per transaction through automatic periodic deduction
from your bank checking or savings account. Shareholders electing to start this
Systematic Investment Plan when opening an account should complete Section 8 of
the account application. Current shareholders may begin such a plan at any time
by sending a signed letter with signature guarantee and a deposit slip or voided
check to the Vista Service Center. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Shares are sold at the public offering price based on the net asset value
next determined after the Vista Service Center receives your order in proper
form. In most cases, in order to receive that day's public offering price, the
Vista Service Center must receive your order before the close of regular trading
on the New York Stock Exchange. If you buy shares through your investment
representative, the representative must receive your order before the close of
regular trading on the New York Stock Exchange to receive that day's public
offering price. Orders for shares are accepted by the Fund after funds are
converted to federal funds. Orders paid by check and received by 2:00 p.m.,
Eastern Time will generally be available for the purchase of shares the
following business day.
If you are considering redeeming or exchanging shares or transferring
shares to another person shortly after purchase, you should pay for those shares
with a certified check to avoid any delay in redemption, exchange or transfer.
Otherwise the Fund may delay payment until the purchase price of those shares
has been collected or, if you redeem by telephone, until 15 calendar days after
the purchase date. To eliminate the need for safekeeping, the Fund will not
issue certificates for your shares unless you request them.
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<PAGE>
Offering Price
The public offering price of Class A shares is the net asset value plus a
sales charge that varies depending on the size of your purchase. The Fund
receives the net asset value. The sales charge is allocated between your
broker-dealer and the Fund's distributor as shown in the following table, except
when the Fund's distributor, in its discretion, allocates the entire amount to
your broker-dealer.
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Sales charge as a
percentage of: Amount of sales charge
Amount of transaction at Offering Net amount reallowed to dealers as a
offering price($) price invested percentage of offering price
- -------------------------------------------------------------------------------
Under 100,000 1.50 1.52 1.00
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100,000 but under 250,000 1.00 1.00 0.50
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250,000 but under 500,000 0.50 0.50 0.25
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500,000 but under 1,000,000 0.25 0.25 0.25
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There is no initial sales charge on purchases of Class A shares of $1
million or more.
General
You may be eligible to buy Class A shares at reduced sales charges.
Consult your investment representative or the Vista Service Center for details
about Vista's combined purchase privilege, cumulative quantity discount,
statement of intention, group sales plan, employee benefit plans, and other
plans. Descriptions are also included in the enclosed application and in the
SAI. In addition, sales charges will not apply to shares purchased with
redemption proceeds received within the prior ninety days from non-Vista mutual
funds on which the investor paid a front-end or contingent deferred sales
charge.
A participant-directed employee benefit plan participating in a
"multi-fund" program approved by the Board of Trustees may include amounts
invested in the other mutual funds participating in such program for purposes of
determining whether the plan may purchase Class A shares at net asset value.
These investments will also be included for purposes of the discount privileges
and programs described above.
The Fund may sell Class A at net asset value without an initial sales
charge to the current and retired Trustees (and their immediate families),
current and retired employees (and their immediate families) of Chase, the
Fund's distributor and transfer agent or any affiliates or subsidiaries thereof,
registered representatives and other employees (and their immediate families) of
broker-dealers having selected dealer agreements with the Fund's distributor,
employees (and their immediate families) of financial institutions having
selected dealer agreements with the Fund's distributor (or otherwise having an
arrangement with a broker-dealer or financial institution with respect to sales
of Vista fund shares) financial institution trust departments investing an
aggregate of $1 million or more in the Vista Family of Funds and clients
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of certain administrators of tax-qualified plans when proceeds from repayments
of loans to participants are invested (or reinvested) in the Vista Family of
Funds.
No initial sales charge will apply to the purchase of Class A shares of
the Fund by an investor seeking to invest the proceeds of a qualified retirement
plan where a portion of the plan was invested in the Vista Family of Funds, any
qualified retirement plan with 50 or more participants, or an individual
participant in a tax-qualified plan making a tax-free rollover or transfer of
assets from the plan in which Chase or an affiliate serves as trustee or
custodian of the plan or manages some portion of the plan's assets.
Purchases of Class A shares of the Fund may be made with no initial sales
charge through an investment adviser or financial planner that charges a fee for
its services. Purchases of Class A shares of the Fund may be made with no
initial sales charge (i) by an investment adviser, broker or financial planner,
provided arrangements are preapproved and purchases are placed through an
omnibus account with the Fund or (ii) by clients of such investment adviser or
financial planner who place trades for their own accounts, if such accounts are
linked to a master account of such investment adviser or financial planner on
the books and records of the broker or agent. Such purchases may be made for
retirement and deferred compensation plans and trusts used to fund those plans.
Purchases of Class A shares of the fund may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary exercising investment discretion, provided that
appropriate notification of such fiduciary relationship is reported at the time
of the investment to the Fund, the Fund's distributor or the Vista Service
Center.
Shareholders of record of any Vista fund as of November 30, 1990 and
certain immediate family members may purchase Class A shares of the Fund with no
initial sales charge for as long as they continue to own Class A shares of any
Vista fund, provided there is no change in account registration. Shareholders of
record of any portfolio of The Hanover Funds, Inc. or The Hanover Investment
Funds, Inc. as of May 3, 1996 and certain related investors may purchase Class A
shares of the Fund with no initial sales charge for as long as they continue to
own shares of any Vista fund following this date, provided there is no change in
account registration.
The Fund may sell Class A shares at net asset value without an initial
sales charge in connection with the acquisition by the Fund of assets of an
investment company or personal holding company. The SAI contains additional
information about purchasing the Fund's shares at reduced sales charges.
The Fund reserves the right to change any of these policies on purchases
without an initial sales charge at any time and may reject any such purchase
request.
Shareholders of other Vista funds may be entitled to exchange their shares
for, or reinvest distributions from their funds in, shares of the Fund at net
asset value.
How to Sell Shares
You can sell your shares to the Fund any day the New York Stock Exchange is
open, either directly to the Fund or through your investment representative. The
Fund will only forward redemption payments on shares for which it has collected
payment of the purchase price.
Selling shares directly to the Fund. Send a signed letter of instruction
to the Vista Service Center, along with any certificates that represent shares
you want to sell. The price you will receive is the next net asset value
calculated after the Fund receives your request in proper form. In order to
receive that day's net asset value, the Vista Service Center must receive your
request before the close of regular trading on the New York Stock Exchange.
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If you sell shares having a net asset value of $100,000 or more, the
signatures of registered owners or their legal representatives must be
guaranteed by a bank, broker-dealer or certain other financial institutions. See
the SAI for more information about where to obtain a signature guarantee.
If you want your redemption proceeds sent to an address other than your
address as it appears on Vista's records, a signature guarantee is required. The
Fund may require additional documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Vista Service Center for details.
The Fund generally sends you payment for your shares the business day after
your request is received, assuming the Fund has collected payment of the
purchase price of your shares. Under unusual circumstances, the Fund may suspend
redemptions, or postpone payment for more than seven days, as permitted by
federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request, as described above,
or contact your investment representative. The Telephone Redemption Privilege is
not available if you were issued certificates for shares that remain
outstanding. The Telephone Redemption Privilege may be modified or terminated
without notice.
Systematic withdrawal. You can make regular withdrawals of $50 or more
monthly, quarterly or semiannually. A minimum account balance of $5,000 is
required to establish a systematic withdrawal plan. Call the Vista Service
Center at 1-800-34-VISTA for complete instructions.
Selling shares through your investment representative. Your investment
representative must receive your request before the close of regular trading on
the New York Stock Exchange to receive that day's net asset value. Your
investment representative will be responsible for furnishing all necessary
documentation to the Vista Service Center, and may charge you for its services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $500 or if you purchase through the Systematic Investment
Plan and fail to meet the Fund's investment minimum within a twelve month
period. In the event of any such redemption, you will receive at least 60 days
notice prior to the redemption.
How to Exchange Your Shares
You can exchange your shares for shares of the same class of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer all classes of shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully and retained for
future reference.
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<PAGE>
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the amount or
number of exchanges or reject any exchange. In addition, any shareholder who
makes more than ten exchanges of shares involving the Fund in a year or three in
a calendar quarter will be charged a $5.00 administration fee for each such
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult the Vista Service Center before requesting an exchange.
See the SAI to find out more about the exchange privilege.
Reinstatement privilege. Class A shareholders have a one time privilege of
reinstating their investment in the Fund at net asset value next determined
subject to written request within 90 calendar days of the redemption,
accompanied by payment for the shares (not in excess of the redemption).
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each business day of the Fund, by
dividing the net assets of the Fund attributable to that class by the total
number of outstanding shares of that class. Values of assets held by the Fund
are determined on the basis of their market or other fair value, as described in
the SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund declares dividends daily and distributes any net investment
income at least monthly. The Fund distributes any net realized capital gains at
least annually. Distributions from capital gains are made after applying any
available capital loss carryover.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares without a sales charge; (2) receive
distributions from net investment income in cash or by ACH to a pre-established
bank account while reinvesting capital gains distributions in additional shares
without a sales charge; or (3) receive all distributions in cash or by ACH. You
can change your distribution option by notifying the Vista Service Center in
writing. If you do not select an option when you open your account, all
distributions will be reinvested. All distributions not paid in cash or by ACH
will be reinvested in shares of the class on which the distributions are paid.
You will receive a statement confirming reinvestment of distributions in
additional Fund shares promptly following the quarter in which the reinvestment
occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes
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<PAGE>
to shareholders. The Fund intends to distribute substantially all of its
ordinary income and capital gain net income on a current basis. If the Fund does
not qualify as a regulated investment company for any taxable year or does not
make such distributions, the Fund will be subject to tax on all of its income
and gains.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Distribution Plan
The Fund's distributor is Vista Fund Distributors, Inc. ("VFD"). VFD is
a subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase. The Trust
has adopted Rule 12b-1 distribution plan for Class A shares which provides that
the Fund will pay distribution fees at annual rates of up to 0.25% of the
average daily net assets attributable to Class A shares of the Fund. Payments
under the distribution plans shall be used to compensate or reimburse the Fund's
distributor and broker-dealers for services provided and expenses incurred in
connection with the sale of Class A shares, and are not tied to the amount of
actual expenses incurred. Payments may be used to compensate broker-dealers with
trail or maintenance commissions at an annual rate of up to 0.25% of the average
daily net asset value of Class A shares maintained in the Fund by customers of
these broker-dealers. Trail or maintenance commissions are paid to
broker-dealers beginning the 13th month following the purchase of shares by
their customers. Some activities intended to promote the sale of Class A shares
will be conducted generally by the Vista Family of Funds, and activities
intended to promote the Fund's Class A shares may also benefit the Fund's other
shares and other Vista funds.
VFD may provide promotional incentives to broker-dealers that meet
specified sales targets for one or more Vista funds. These incentives may
include gifts of up to $100 per person annually; an occasional meal, ticket to a
sporting event or theater or entertainment for broker-dealers and their guests;
and payment or reimbursement for travel expenses, including lodging and meals,
in connection with attendance at training and educational meetings within and
outside the U.S.
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Class A shares of the Fund. These services
include assisting with purchase and redemption transactions, maintaining
shareholder accounts and records, furnishing customer statements, transmitting
shareholder reports and communications to customers and other similar
shareholder liaison services. For performing these services, each shareholder
servicing agent receives an annual fee of up to 0.25% of the
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<PAGE>
average daily net assets of Class A shares of the Fund held by investors for
whom the shareholder servicing agent maintains a servicing relationship.
Shareholder servicing agents may subcontract with other parties for the
provision of shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator and Sub-Administrator
Chase acts as administrator of the Fund and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets.
VFD provides certain sub-administrative services to the Fund pursuant to
a distribution and sub-administration agreement and is entitled to receive a
fee for these services from the Fund at an annual rate equal to 0.05% of the
Fund's average daily net assets. VFD has agreed to use a portion of this fee to
pay for certain expenses incurred in connection with organizing new series of
the Trust and certain other ongoing expenses of the Trust. VFD is located at
101 Park Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Shareholder servicing and
distribution fees are allocated to specific classes of the Fund. In addition,
the Fund may allocate transfer agency and certain other expenses by class.
Service providers to the Fund may, from time to time, voluntarily waive all or a
portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series
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<PAGE>
or class with each other share of that series or class. The shares of each
series or class participate equally in the earnings, dividends and assets of the
particular series or class. Shares have no preemptive or conversion rights.
Shares when issued are fully paid and non-assessable, except as set forth below.
Shareholders are entitled to one vote for each whole share held, and each
fractional share shall be entitled to a proportionate fractional vote, except
that Trust shares held in the treasury of the Trust shall not be voted. Shares
of each class of the Fund generally vote together except when required under
federal securities laws to vote separately on matters that only affect a
particular class, such as the approval of distribution plans for a particular
class.
The Fund issues multiple classes of shares. This Prospectus relates only
to Class A and Class B shares of the Fund. The Fund offers other classes of
shares in addition to this class. The categories of investors that are eligible
to purchase shares and minimum investment requirements may differ for each class
of Fund shares. In addition, other classes of Fund shares may be subject to
differences in sales charge arrangements, ongoing distribution and service fee
levels, and levels of certain other expenses, which will affect the relative
performance of the different classes. Investors may call 1-800-34-VISTA to
obtain additional information about other classes of shares of the Fund that are
offered. Any person entitled to receive compensation for selling or servicing
shares of the Fund may receive different levels of compensation with respect to
one class of shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be
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<PAGE>
purchased by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income calculated pursuant to federal rules per share
during a recent 30- day period by the maximum public offering price per share of
such class on the last day of that period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the maximum public offering price (in the case of Class A shares) or
reflecting the deduction of any applicable contingent deferred sales charge (in
the case of Class B shares). Total return may also be presented for other
periods or without reflecting sales charges. Any quotation of investment
performance not reflecting the maximum initial sales charge or contingent
deferred sales charge would be reduced if such sales charges were used.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other mutual
funds and other investment vehicles. Quotation of investment performance for any
period when a fee waiver or expense limitation was in effect will be greater
than if the waiver or limitation had not been in effect. The Fund's performance
may be compared to other mutual funds, relevant indices and rankings prepared by
independent services. See the SAI.
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<PAGE>
MAKE THE MOST OF YOUR VISTA PRIVILEGES
The following services are available to you as a Vista mutual fund shareholder.
o SYSTEMATIC INVESTMENT PLAN - Invest as much as you wish ($100 or more) in
the first or third week of any month. The amount will be automatically
transferred from your checking or savings account.
o SYSTEMATIC WITHDRAWAL - Make regular withdrawals of $50 or more monthly,
quarterly or semiannually. A minimum account balance of $5,000 is required
to establish a systematic withdrawal plan.
o SYSTEMATIC EXCHANGE - Transfer assets automatically from one Vista account
to another on a regular, prearranged basis. There is no additional charge
for this service.
o FREE EXCHANGE PRIVILEGE - Exchange money between Vista funds in the same
class of shares without charge. The exchange privilege allows you to
adjust your investments as your objectives change.
Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange and systematic withdrawal or exchange.
o REINSTATEMENT PRIVILEGE - Class A shareholders have a one time privilege
of reinstating their investment in the Fund at net asset value next
determined subject to written request within 90 calendar days of the
redemption, accompanied by payment for the shares (not in excess of the
redemption).
Class B shareholders who have redeemed their shares and paid a CDSC with
such redemption may purchase Class A shares with no initial sales charge
(in an amount not in excess of their redemption proceeds) if the purchase
occurs within 90 days of the redemption of the Class B shares.
For more information about any of these services and privileges, call your
shareholder servicing agent, investment representative or the Vista Service
Center at 1-800-34-VISTA. These privileges are subject to change or termination.
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<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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<PAGE>
PROSPECTUS
VISTA[SM] SHORT-TERM BOND FUND
Institutional Shares
May 6, 1996
Investment Strategy: Income
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-622-4273. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary........................................................
Financial Highlights...................................................
Fund Objective.........................................................
Investment Policies....................................................
Management.............................................................
How to Purchase, Redeem and Exchange Shares............................
How the Fund Values its Shares.........................................
How Distributions are Made; Tax Information............................
Other Information Concerning the Fund..................................
Performance Information................................................
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<PAGE>
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the Fund based on
expenses incurred in the most recent fiscal year. The example shows the
cumulative expenses attributable to a hypothetical $1,000 investment over
specified periods.
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee (after estimated waiver)(*)............... 0.00%
12b-1 Fee......................................................... None
Shareholder Servicing Fee(after estimated waiver)(*).............. 0.00%
Other Expenses(after estimated waiver)(*)......................... 0.42%
-----
Total Fund Operating Expenses (after waivers of fees)(*).......... 0.42%
=====
Example
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Year 5 Years 10 Years
------ ------ ------- --------
Institutional Shares... $4 $13 $24 $53
- ------------------------
* Reflects current waiver arrangements to maintain Total Fund Operating
Expenses at the level indicated in the table above. Absent such waivers,
the Investment Advisory Fee, Shareholder Servicing Fee and Other Expenses
would be 0.25%, 0.25% and 0.50%, respectively, and Total Fund Operating
Expenses would be 1.00%.
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges and credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
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<PAGE>
FINANCIAL HIGHLIGHTS
The following information on selected per share data and ratios with
respect to each of the four fiscal periods commencing after June 30, 1992, and
the related financial statements, have been audited by Price Waterhouse LLP,
independent accountants, whose report expressed an unqualified opinion thereon.
The information on selected per share data and ratios with respect to the fiscal
year ended June 30, 1992 and the period November 30, 1990 to June 30, 1991, have
been audited by other independent accountants, whose report expressed an
unqualified opinion thereon. The following information should be read in
conjunction with the financial statements and notes thereto which are
incorporated by reference in the SAI.
<TABLE>
<CAPTION>
VISTA SHORT-TERM BOND FUND
Institutional Shares
--------------------------------------------------------------
Year Ended 7/1/92** Year 11/30/90*
---------------------------- through Ended through
PER SHARE OPERATING PERFORMANCE 10/31/95 10/31/94 10/31/93 10/31/92 6/30/92 6/30/91
-------- -------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period. ........ $9.91 $10.14 $10.26 $10.28 $10.13 $10.00
Income from Investment Operations: ----- ------ ------ ------ ------ ------
Net Investment Income .................... 0.542 0.465 0.489 0.190 0.600 0.370
Net Gains or (Losses) in securities
(both realized and unrealized) ............ 0.168 (0.230) (0.073) (0.010) 0.190 0.070
----- ------ ------ ------ ----- -----
Total from Investment Operations:......... 0.710 0.235 0.416 0.180 0.790 0.440
----- ------ ------ ------ ----- -----
Less Distributions:
Dividends from Net Investment Income...... 0.542 0.465 0.536 0.200 0.630 0.310
Distributions from Capital Gains ......... 0.000 0.000 0.000 0.000 0.010 0.000
------ ----- ----- ----- ----- -----
Total Distributions: ..................... 0.542 0.465 0.536 0.200 0.640 0.310
------ ----- ----- ----- ----- -----
Net Asset Value, End of Period ............... $10.08 $ 9.91 $10.14 $10.26 $10.28 $10.13
====== ====== ====== ====== ====== ======
Total Return ................................. 7.37% 2.38% 4.73% 1.67% 8.07% 4.39%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) .... $36,246 $35,987 $70,693 $81,327 $70,960 $70,745
Ratio of Expenses to Average
Net Assets# .............................. 0.32% 0.31% 0.31% 0.30% 0.30% 0.29%
Ratio of Net Investment Income to
Average Net Assets# ...................... 5.41% 4.59% 5.25% 5.66% 6.12% 6.56%
Ratio of Expenses without waivers and
assumption of expenses to Average
Net Assets# .............................. 0.90% 0.86% 0.76% 0.66% 0.94% 0.99%
Ratio of Net Investment Income without
waivers and assumption of expenses to
Average Net Assets# ...................... 4.83% 4.05% 4.80% 5.30% 5.48% 5.86%
Portfolio Turnover Rate ...................... 62% 44% 17% 0% 29% 1%
</TABLE>
- ------------------------
* Commencement of operations.
# Short periods have been annualized.
** In 1992 the Fund's fiscal year-end was changed from June 30 to October 31.
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<PAGE>
FUND OBJECTIVE
Vista Short Term Bond Fund seeks a high level of current income,
consistent with preservation of capital. The Fund is not intended to be a
complete investment program, and there is no assurance it will achieve its
objective.
INVESTMENT POLICIES
Investment Approach
The Fund will invest at least 65% of its net assets in bonds which have a
maturity of less than three years, and the dollar weighted average maturity of
its portfolio will not exceed three years. The Fund normally will invest
substantially all of its assets in investment-grade fixed-income securities of
all types. The maturity of securities with put features will be measured
based on the next put date, and the maturity of mortgage- and asset-backed
securities will be measured based upon their weighted average lives.
Investment-grade fixed-income securities are securities rated in the category
Baa or higher by Moody's Investors Service, Inc. ("Moody's"), or BBB or higher
by Standard & Poor's Corporation ("S&P") or the equivalent by another national
rating organization, and unrated securities determined by the Fund's advisers to
be of comparable quality.
In making investment decisions for the Fund, its advisers consider many
factors in addition to current yield, including preservation of capital,
maturity and yield to maturity. They will adjust the Fund's investments in
particular securities or types of securities based upon their appraisal of
changing economic conditions and trends. The Fund's advisers may sell one
security and purchase another security of comparable quality and maturity to
take advantage of what they believe to be short-term differentials in market
values or yield disparities.
Fixed-income securities in the Fund's portfolio may include, in any
proportion, bonds, notes, mortgage-backed securities, asset-backed securities,
government and government agency obligations, zero coupon securities,
convertible securities and money market instruments, as discussed below.
The Fund is classified as a "diversified" fund under the federal securities
law.
In lieu of investing directly, the Fund is authorized to seek to
achieve its objective by investing all of its investable assets in an investment
company having substantially the same investment objective and policies as the
Fund.
Other Investment Practices
The Fund may also engage in the following investment practices, when
consistent with the Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI.
Money Market Instruments. The Fund may invest in cash or high-quality,
short-term money market instruments. Such instruments may include U.S.
Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Repurchase Agreements, Securities Loans and Forward Commitments. The Fund
may enter into agreements to purchase and resell securities at an agreed-upon
price and time. The Fund also has the ability to lend portfolio securities in an
amount equal to not more than 30% of its total assets to generate additional
income. These transactions must be fully collateralized at all times. The Fund
may purchase securities for delivery at a future date, which may increase its
overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date. These transactions involve
some risk to the Fund if the other party should default on its obligation and
the Fund is delayed or prevented from recovering the collateral or completing
the transaction.
Borrowings and Reverse Repurchase Agreements. The Fund may borrow money
from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Fund may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Fund enters into a reverse repurchase agreement, it
will establish a segregated account in which it will maintain liquid assets on a
daily basis
-5-
<PAGE>
in an amount at least equal to the repurchase price (including accrued
interest). The Fund would be required to pay interest on amounts obtained
through reverse repurchase agreements, which are considered borrowings under
federal securities laws.
Stand-By Commitments. The Fund may enter into put transactions, including
transactions sometimes referred to as stand-by commitments, with respect to
securities in its portfolio. In these transactions, the Fund would acquire the
right to sell a security at an agreed upon price within a specified period prior
to its maturity date. These transactions involve some risk to the Fund if the
other party should default on its obligation and the Fund is delayed or
prevented from recovering the collateral or completing the transaction.
Acquisition of puts will have the effect of increasing the cost of the
securities subject to the put and thereby reducing the yields otherwise
available from such securities.
Zero Coupon Securities, Payment-in-Kind Obligations and Stripped
Obligations. The Fund may invest in zero coupon securities issued by
governmental and private issuers. Zero coupon securities are debt securities
that do not pay regular interest payments, and instead are sold at substantial
discounts from their value at maturity. Payment-in-kind obligations are
obligations on which the interest is payable in additional securities rather
than cash. The Fund may also invest in stripped obligations, which are
separately traded principal and interest components of an underlying obligation.
The value of these instruments tends to fluctuate more in response to changes in
interest rates than the value of ordinary interest-paying debt securities with
similar maturities. The risk is greater when the period to maturity is longer.
Floating and Variable Rate Securities; Participation Certificates. The Fund
may invest in floating rate securities, whose interest rates adjust
automatically whenever a specified interest rate changes, and variable rate
securities, whose interest rates are periodically adjusted. Certain of these
instruments permit the holder to demand payment of principal and accrued
interest upon a specified number of days' notice from either the issuer or a
third party. The securities in which the Fund may invest include participation
certificates and certificates of indebtedness or safekeeping. Participation
certificates are pro rata interests in securities held by others; certificates
of indebtedness or safekeeping are documentary receipts for such original
securities held in custody by others. As a result of the variable rate nature of
these investments, the Fund's yield may decline and it may forego the
opportunity for capital appreciation during periods when interest rates decline;
however, during periods when interest rates increase, the Fund's yield may
increase and it may have reduced risk of capital depreciation. Demand features
on certain floating or variable rate securities may obligate the Fund to pay a
"tender fee" to a third party. Demand features provided by foreign banks involve
certain risks associated with foreign investments.
Inverse Floaters and Interest Rate Caps. The Fund may invest in inverse
floaters and in securities with interest rate caps. Inverse floaters are
instruments whose interest rates bear an inverse relationship to the interest
rate on another security or the value of an index, and their price may be
considerably more volatile than a fixed-rate security. Interest rate caps are
financial instruments under which payments occur if an interest rate index
exceeds a certain predetermined interest rate level, known as the cap rate,
which is tied to a specific index. These financial products will be more
volatile in price than securities which do not include such a structure.
Mortgage-Related Securities. The Fund may invest in mortgage-related
securities. Mortgage pass-through securities are securities representing
interests in "pools" of mortgages in which payments of both interest and
principal on the securities are made monthly, in effect "passing through"
monthly payments made by the individual borrowers on the residential mortgage
loans which underlie the securities. Early repayment of principal on mortgage
pass-through securities held by the Fund (due to prepayments of principal on the
underlying mortgage loans) may result in a lower rate of return when the Fund
reinvests such principal. In addition, if the Fund purchased the securities at a
premium, early repayment would cause the value of the premium to be lost. Like
other fixed-income securities, when interest rates rise the value of a
mortgage-related security generally will decline; however, when interest rates
decline, the value of mortgage-related securities with prepayment features may
not increase as much as other fixed-income securities.
Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by the
U.S. Government, or by agencies or instrumentalities of the
-6-
<PAGE>
U.S. Government (which guarantees are supported only by the discretionary
authority of the U.S. Government to purchase the agency's obligations). Mortgage
pass-through securities created by nongovernmental issuers may be supported by
various forms of insurance or guarantees.
The Fund may also invest in investment grade Collateralized Mortgage
Obligations ("CMOs"), which are hybrid instruments with characteristics of both
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal on a CMO are paid, in most cases, monthly. CMOs
may be collateralized by whole mortgage loans but are more typically
collateralized by portfolios of mortgage pass-through securities guaranteed by
the U.S. Government or its agencies or instrumentalities. CMOs are structured
into multiple classes, with each class having a different expected average life
and/or stated maturity. Monthly payments of principal, including prepayments,
are allocated to different classes in accordance with the terms of the
instruments,and changes in prepayment rates or assumptions may significantly
affect the expected average life and value of a particular class.
The Fund expects that governmental, government-related or private entities
may create other mortgage-related securities in addition to those described
above. As new types of mortgage-related securities are developed and offered to
investors, the Fund will consider making investments in such securities.
Asset-Backed Securities. The Fund may invest in asset-backed securities,
which represent a participation in, or are secured by and payable from, a stream
of payments generated by particular assets, most often a pool of assets similar
to one another, such as motor vehicle receivables or credit card receivables.
Other Investment Companies. The Fund may invest up to 10% of its total
assets in shares of other investment companies, subject to applicable regulatory
limitations.
Derivatives and Related Instruments. The Fund may invest its assets in
derivative and related instruments to hedge various market risks or to increase
the Fund's income or gain. Some of these instruments will be subject to asset
segregation requirements to cover the Fund's obligations. The Fund may (i)
purchase, write and exercise call and put options on securities and securities
indexes (including using options in combination with securities, other options
or derivative instruments); (ii) enter into swaps, futures contracts and options
on futures contracts; (iii) employ forward interest rate contracts; (iv)
purchase and sell mortgage-backed and asset-backed securities; and (v) purchase
and sell structured products, which are instruments designed to restructure or
reflect the characteristics of certain other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Fund invests may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of the Fund to successfully utilize
these instruments may depend in part upon the ability of the Fund's advisers to
forecast these factors correctly. Inaccurate forecasts could expose the Fund to
a risk of loss. There can be no guarantee that there will be a correlation
between price movements in a hedging instrument and in the portfolio assets
being hedged. The Fund is not required to use any hedging strategies. Hedging
strategies, while reducing risk of loss, can also reduce the opportunity for
gain. Derivatives transactions not involving hedging may have speculative
characteristics, involve leverage and result in more risk to the Fund than
hedging strategies using the same instruments. There can be no assurance that a
liquid market will exist at a time when the Fund seeks to close out a
derivatives position. Activities of large traders in the futures and securities
markets involving arbitrage, "program trading," and other investment strategies
may cause price distortions in derivatives markets. In certain instances,
particularly those involving over-the-counter transactions or forward contracts,
there is a greater potential that a counterparty or broker may default. In the
event of a default, the Fund may experience a loss. For additional information
concerning derivatives, related instruments and the associated risks, see the
SAI.
Portfolio Turnover. The frequency of the Fund's portfolio transactions
will vary from year to year. The Fund's investment policies may lead to frequent
changes in investments, particularly in periods of rapidly changing market
conditions. High portfolio turnover rates would generally result in higher
transaction costs, including brokerage commissions or dealer mark-ups, and would
make it more difficult for the Fund to qualify as a registered investment
company under federal tax law. See "How Distributions are Made; Tax Information"
and "Other Information Concerning the Fund--Certain Regulatory Matters."
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Limiting Investment Risks
Specific investment restrictions help the Fund limit investment risks for
its shareholders. These restrictions prohibit the Fund from: (a) with respect to
75% of its total assets, holding more than 10% of the voting securities of any
issuer or investing more than 5% of its total assets in the securities of any
one issuer (other than U.S. Government obligations); (b) investing more than 15%
of its net assets in illiquid securities (which include securities restricted as
to resale unless they are determined to be readily marketable in accordance with
procedures established by the Board of Trustees); or (c) investing more than 25%
of its total assets in any one industry. A complete description of these and
other investment policies is included in the SAI. Except for the Fund's
investment objective, restriction (c) above and investment policies designated
as fundamental in the SAI, the Fund's investment policies are not fundamental.
The Trustees may change any non-fundamental investment policy without
shareholder approval.
Risk Factors
The Fund does not constitute a balanced or complete investment program,
and the net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities in the Fund's portfolio. The Fund is
subject to the general risks and considerations associated with the types of
investments it may make, as described above, as well as the risks discussed
herein.
The performance of the Fund depends in part on interest rate changes.
As interest rates increase, the value of the fixed income securities held by the
Fund tends to decrease. This effect will be more pronounced with respect to
investments by the Fund in mortgage-related securities, the value of which are
more sensitive to interest rate changes. Although the Fund invests at least 65%
of its assets in bonds which have a maturity of less than three years, to the
extent the Fund invests in securities with longer maturities, the volatility of
the Fund in response to changes in interest rates can be expected to be greater
than if the Fund had invested in comparable securities with shorter maturities.
The performance of the Fund will also depend on the quality of its investments.
While U.S. Government securities generally are of high quality, government
securities that are not backed by the full faith and credit of the U.S. Treasury
may be affected by changes in the creditworthiness of the agency that issued
them and the non-U.S. Government securities held by the Fund, while of
investment-grade quality, may be of lesser credit quality. Securities rated in
the category Baa by Moody's or BBB by S&P lack certain investment
characteristics and may have speculative characteristics.
For a discussion of certain other risks associated with the Fund's
additional investment activities, see "Other Investment Practices" above.
MANAGEMENT
The Fund's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the Fund
pursuant to an Investment Advisory Agreement and has overall responsibility for
investment decisions of the Fund, subject to the oversight of the Board of
Trustees. Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation,
a bank holding company. Chase and its predecessors have over 100 years of money
management experience. For its investment advisory services to the Fund, Chase
is entitled to receive an annual fee computed daily and paid monthly based at an
annual rate equal to 0.25% of the Fund's average daily net assets. Chase is
located at 270 Park Avenue, New York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Fund pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly-owned
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operating subsidiary of Chase. CAM makes investment decisions for the Fund on a
day-to-day basis. For these services, CAM is entitled to receive a fee, payable
by Chase from its advisory fee, at an annual rate equal to 0.10% of the Fund's
average daily net assets. CAM was recently formed for the purpose of providing
discretionary investment advisory services to institutional clients and to
consolidate Chase's investment management function. The same individuals who
serve as portfolio managers for Chase also serve as portfolio managers for CAM.
CAM is located at 1211 Avenue of the Americas, New York, New York 10036.
Portfolio Manager. Linda Struble, Vice President of Chase and the manager
of Chase's fixed income trading unit, is responsible for day-to-day management
of the Fund's portfolio. Ms. Struble has managed the Fund's portfolio since its
inception on November 30, 1990 and has been with Chase since 1968 performing
various investment services, including managing individual accounts.
HOW TO PURCHASE, REDEEM AND EXCHANGE SHARES
How to Purchase Shares
Institutional Shares may be purchased through selected financial service
firms, such as broker-dealer firms and banks ("Dealers") who have entered into a
selected dealer agreement with the Fund's distributor on each business day
during which the New York Stock Exchange is open for trading ("Fund Business
Day"). Qualified investors are defined as institutions, trusts, partnerships,
corporations, qualified and other retirement plans and fiduciary accounts opened
by a bank, trust company or thrift institution which exercises investment
authority over such accounts. The Fund reserves the right to reject any purchase
order or cease offering shares for purchase at any time.
Institutional Shares are sold at their public offering price, which is
their next determined net asset value. Orders received by Dealers in proper form
prior to the New York Stock Exchange closing time are confirmed at that day's
offering price, provided the order is received by the Vista Service Center prior
to its close of business. Dealers are responsible for forwarding orders for the
purchase of shares on a timely basis. Fund shares normally will be maintained in
book entry form and share certificates will be issued only upon request.
Management reserves the right to refuse to sell shares of the Fund to any
institution.
Federal regulations require that each investor provide a certified
Taxpayer Identification Number upon opening an account.
Minimum Investments
The Fund has established a minimum initial investment amount of $1,000,000
for the purchase of Institutional Shares. There is no minimum for subsequent
investments. Purchases of Institutional Shares offered by other non-money market
Vista funds may be aggregated with purchases of Institutional Shares of the Fund
to meet the $1,000,000 minimum initial investment amount requirement.
How to Redeem Shares
You may redeem all or any portion of the shares in your account at any
time at the net asset value next determined after a redemption request in proper
form is furnished by you to your Dealer and transmitted to and received by the
Vista Service Center. A wire redemption may be requested by telephone or wire to
the Vista Service Center. For telephone redemptions, call the Vista Service
Center at 1-800-622-4273.
In making redemption requests, the names of the registered shareholders on
your account and your account number must be supplied, along with any
certificates that represent shares you want to sell. The price you will
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receive is the next net asset value calculated after the Fund receives your
request in proper form. In order to receive that day's net asset value, the
Vista Service Center must receive your request before the close of regular
trading on the New York Stock Exchange.
The Fund generally sends you payment for your shares by wire in federal
funds on the business day after your request is received. Under unusual
circumstances, the Fund may suspend redemptions, or postpone payment for more
than seven days, as permitted by federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his of her account registration
and address as it appears on the Fund's records.
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request or contact your
Dealer. The Telephone Redemption Privilege is not available if you were issued
certificates for shares that remain outstanding. The Telephone Redemption
Privilege may be modified or terminated without notice.
Selling shares through your Dealer. Your Dealer must receive your request
before the close of regular trading on the New York Stock Exchange to receive
that day's net asset value. Your Dealer will be responsible for furnishing all
necessary documentation to the Vista Service Center, and may charge you for its
services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $1,000,000. In the event of any such redemption, you will
receive at least 60 days notice prior to the redemption.
How to Exchange Your Shares
You can exchange your shares for Institutional Shares of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer Institutional Shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully prior to any exchange
and retained for future reference.
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the
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amount or number of exchanges or reject any exchange. In addition, any
shareholder who makes more than ten exchanges of shares involving the Fund in a
year or three in a calendar quarter will be charged a $5.00 administration fee
for each such exchange. Shareholders would be notified of any such action to the
extent required by law. Consult the Vista Service Center before requesting an
exchange. The exchange privilege is subject to change or termination. See the
SAI to find out more about the exchange privilege.
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each Fund Business Day, by dividing the
net assets of the Fund attributable to that class by the total number of
outstanding shares of that class. Values of assets held by the Fund are
determined on the basis of their market or other fair value, as described in the
SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund declares dividends daily and distributes any net investment
income at least monthly. The Fund distributes any net realized capital gains at
least annually. Distributions from capital gains are made after applying any
available capital loss carryover.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares; (2) receive distributions from net
investment income in cash or by ACH to a pre-established bank account while
reinvesting capital gains distributions in additional shares; or (3) receive all
distributions in cash or by ACH. You can change your distribution option by
notifying the Vista Service Center in writing. If you do not select an option
when you open your account, all distributions will be reinvested. All
distributions not paid in cash or by ACH will be reinvested in shares of the
class on which the distributions are paid. You will receive a statement
confirming reinvestment of distributions in additional Fund shares promptly
following the quarter in which the reinvestment occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
A portion of the ordinary income dividends paid by the Fund may qualify
for the 70% dividends-received deduction for corporate shareholders.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount
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of the distribution received, even though the net asset value per share on the
date of such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Institutional shares of the Fund. These services
include assisting with purchase and redemption transactions, maintaining
shareholder accounts and records, furnishing customer statements, transmitting
shareholder reports and communications to customers and other similar
shareholder liaison services. For performing these services, each shareholder
servicing agent receives an annual fee of up to 0.25% of the average daily net
assets of Institutional shares of the Fund held by investors for whom the
shareholder servicing agent maintains a servicing relationship. Shareholder
servicing agents may subcontract with other parties for the provision of
shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator
Chase acts as administrator of the Fund and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets.
Sub-Administrator and Distributor
Vista Fund Distributors, Inc. ("VFD") acts as the Fund's sub-administrator
and distributor. VFD is a subsidiary of The BISYS Group, Inc. and is
unaffiliated with Chase. For the sub-administrative services it performs, VFD is
entitled to receive a fee from the Fund at an annual rate equal to 0.05% of the
Fund's average daily net assets. VFD has agreed to use a portion of this fee to
pay for certain expenses incurred in connection with organizing new series of
the Trust and certain other ongoing expenses of the Trust. VFD is located at 101
Park Avenue, New York, New York 10178.
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Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Shareholder servicing and
distribution fees are allocated to specific classes of the Fund. In addition,
the Fund may allocate transfer agency and certain other expenses by class.
Service providers to the Fund may, from time to time, voluntarily waive all or a
portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Shares have no
pre-emptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of the Fund generally vote
together except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class.
The Fund issues multiple classes of shares. This Prospectus relates only
to Institutional Shares of the Fund, one class of shares offered by the Fund.
Institutional Shares may be purchased only by qualified investors that make an
initial investment of $1,000,000 or more. "Qualified investors" are defined as
institutions, trusts, partnerships, corporations, qualified and other retirement
plans and fiduciary accounts opened by a bank, trust company or thrift
institution which exercises investment authority over such accounts. The Fund
offers other classes of shares in addition to these classes. The categories of
investors that are eligible to purchase shares may differ for each class of Fund
shares. In addition, other classes of Fund shares may be subject to differences
in sales charge arrangements, ongoing distribution and service fee levels, and
levels of certain other expenses, which will affect the relative performance of
the different classes. Investors may call 1-800-622-4273 to obtain additional
information about other classes of shares of the Fund that are offered. Any
person entitled to receive compensation for selling or servicing shares of the
Fund may receive different levels of compensation with respect to one class of
shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
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Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income per share during a recent 30-day period by the
maximum public offering price per share of such class on the last day of that
period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the public offering price. Total return may also be presented for
other periods.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase.
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Investment performance also often reflects the risks associated with the Fund's
investment objectives and policies. These factors should be considered when
comparing the Fund's investment results to those of other mutual funds and other
investment vehicles. Quotation of investment performance for any period when a
fee waiver or expense limitation was in effect will be greater than if the
waiver or limitation had not been in effect. The Fund's performance may be
compared to other mutual funds, relevant indices and rankings prepared by
independent services. See the SAI.
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VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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PROSPECTUS
VISTA[SM] GLOBAL FIXED INCOME FUND
Class A and B Shares
May 6, 1996
Investment Strategy: Total Return
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-34-VISTA. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
The Fund, unlike many other investment companies which directly acquire and
manage their own portfolios of securities, seeks its investment objective by
investing all of its investable assets in Global Fixed Income Portfolio (the
"Portfolio"), an open-end management investment company with investment
objectives identical to those of the Fund. Investors should carefully consider
this investment approach. For additional information regarding this investment
structure, see "Unique Characteristics of Master/Feeder Fund Investment
Structure" on page 21.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary..........................................................
The expenses you might pay on your Fund investment, including examples
Financial Highlights.....................................................
How the Fund has performed
Fund Objective...........................................................
Investment Policies......................................................
The kinds of securities in which the Fund invests,
investment policies and techniques, and risks
Management...............................................................
Chase Manhattan Bank, the Fund's adviser; Chase Asset Management,
the Fund's sub-adviser, and the individuals who manage the Fund
About Your Investment....................................................
Alternative sales arrangements
How to Buy, Sell and Exchange Shares.....................................
How the Fund Values its Shares...........................................
How Distributions are Made; Tax Information..............................
How the Fund distributes its earnings, and
tax treatment related to those earnings
Other Information Concerning the Fund....................................
Distribution plans, shareholder servicing agents, administration,
custodian, expenses, organization and regulatory matters
Performance Information..................................................
How performance is determined, stated and/or advertised
Make the Most of Your Vista Privileges...................................
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<PAGE>
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the Fund based on
expenses incurred in the most recent fiscal year. The examples show the
cumulative expenses attributable to a hypothetical $1,000 investment over
specified periods.
Class A Class B
Shareholder Transaction Expenses Shares Shares
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)................... 4.50% None
Maximum Deferred Sales Charge
(as a percentage of the lower of original
purchase price or redemption proceeds)(*)............ None 5.00%
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee (after estimated waiver) (**) 0.00% 0.00%
12b-1 Fee(***)....................................... 0.25% 0.75%
Shareholder Servicing Fee (after estimated waiver,
where indicated) .................................... 0.11%(**) 0.25%
Other Expenses (after estimated waiver and
reimbursement)(**) ............................... 1.50% 1.50%
----- -----
Total Fund Operating Expenses (after waivers of fees and
expense reimbursement) (**)....................... 1.86% 2.50%
===== =====
Examples
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares(+)................ $63 $101 $141 $253
Class B Shares:
Assuming complete
redemption at the
end of the
period(++)(+++)................ $77 $110 $156 $268
Assuming no
redemptions (+++).............. $25 $78 $133 $268
- -----------------------
-3-
<PAGE>
* The maximum deferred sales charge on Class B shares applies to redemptions
during the first year after purchase; the charge generally declines by 1%
annually thereafter (except in the fourth year), reaching zero after six
years. See "How to Buy, Sell and Exchange Shares."
** Reflects current fee waiver and expense reimbursement arrangements to
maintain Total Fund Operating Expenses at the levels indicated in the table
above. Absent such arrangements, the Investment Advisory Fee and Other
Expenses would be 0.75% and 3.65%, respectively, for Class A and Class B
shares, the Shareholder Servicing Fee would be 0.25% for Class A shares, and
Total Fund Operating Expenses would be 4.90% and 5.40% for Class A and Class
B shares, respectively.
*** Long-term shareholders in mutual funds with 12b-1 fees, such as Class A and
Class B shareholders of the Fund, may pay more than the economic equivalent
of the maximum front-end sales charge permitted by rules of the National
Association of Securities Dealers, Inc.
+ Assumes deduction at the time of purchase of the maximum sales charge.
++ Assumes deduction at the time of redemption of the maximum applicable
deferred sales charge.
+++ Ten-year figures assume conversion of Class B shares to Class A shares at
the beginning of the ninth year after purchase. See "How to Buy, Sell and
Exchange Shares."
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
-4-
<PAGE>
FINANCIAL HIGHLIGHTS
The table set forth below provides selected per share data and ratios for
both Class A and Class B shares for each of the periods shown. This information
is supplemented by and should be read in conjunction with financial statements
and accompanying notes appearing in the Fund's Annual Report to Shareholders for
the fiscal year ended October 31, 1995, which is incorporated by reference into
the SAI. The financial statements and notes, as well as the financial
information set forth in the table below, have been audited by Price Waterhouse
LLP, independent accountants, whose report thereon is also included in the
annual report to shareholders. Shareholders can obtain a copy of this annual
report by contacting the Fund or their Shareholder Servicing Agent.
<TABLE>
<CAPTION>
VISTA GLOBAL FIXED INCOME FUND
Class A Class B
----------------------------------- -----------------------
Year Ended 12/31/92+ 11/4/93++
----------------------- through Year Ended through
10/31/95 10/31/94 10/31/93 10/31/95 10/31/94
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -------------------------------
Net asset value, beginning of period ............... $10.21 $ 10.52 $10.00 $10.20 $ 10.48
------ ------- ------ ------ -------
Income from Investment Operations:
Net Investment Income (Loss)* ................. 0.353 0.464 0.300 0.298 0.339
Net Gains or (Losses) in Securities (both
realized and unrealized) ................... 0.610 (0.495) 0.550 0.590 (0.382)
------ ------- ------ ------ -------
Total from Investment Operations .............. 0.963 (0.031) 0.850 0.888 (0.043)
------ ------- ------ ------ -------
Less Distributions:
From Net Investment Income .................... 0.523 0.279 0.300 0.463 0.237
From Paid In Capital .......................... 0.000 0.000 0.030 0.000 0.000
------ ------- ------ ------ -------
Total Distributions ........................... 0.523 0.279 0.330 0.463 0.237
------ ------- ------ ------ -------
Net asset value, end of period ..................... $10.65 $ 10.21 $10.52 $10.63 $ 10.20
====== ======= ====== ====== =======
Total return (1)* .................................. 9.54% (0.66%) 10.42% 8.82% (0.51%)
Ratios/Supplemental Data**
Net Assets, end of period (in 000's) ............ $1,515 $ 1,365 $2,361 $ 409 $ 282
Ratio of Expenses to Average Net Assets ......... 1.86% 1.86% 1.88%* 2.50%* 2.50%*
Ratio of Net Investment Income to Average Net
Assets ........................................ 4.58% 3.83% 3.29%* 3.92% 3.79%*
Ratio of Expenses without waivers and
assumption of expenses to Average Net Assets# 2.86% 2.86% 2.86%* 3.36% 3.36%*
Ratio of Net Investment Income without waivers
and assumption of expenses to Average Net
Assets ...................................... 3.58% 2.83% (.09%)* 3.06% 2.93%*
</TABLE>
- --------------------
+ Commencement of operations.
++ Commencement of offering of shares.
** Includes the Fund's share of Portfolio income and expenses, as appropriate.
* Annualized.
(1) Total return figures do not include the effect of any sales load.
# Not to exceed the maximum statutory expense.
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<PAGE>
FUND OBJECTIVE
Vista Global Fixed Income Fund seeks a high total return through current
income and capital appreciation. The Fund is not intended to be a complete
investment program, and there is no assurance it will achieve its objective.
INVESTMENT POLICIES
Investment Approach
The Fund seeks to achieve its objective by investing all of its investable
assets in the Portfolio. The Portfolio invests primarily in investment grade
fixed income securities of U.S. and foreign issuers and engages in foreign
currency and interest rate transactions to enhance returns and hedge its
portfolio. Under normal market conditions, at least 65% of the Portfolio's total
assets will be invested in investment grade fixed income securities, and will be
invested in at least three countries. Although the Portfolio primarily invests
in investment grade fixed income securities, up to 25% of its total assets may
be invested in high yield, high risk non-investment grade debt securities
primarily issued by issuers based in developing countries.
The Portfolio's advisers will allocate the Portfolio's investments among
securities denominated in the U.S. dollar and currencies of foreign countries.
The advisers may adjust the Portfolio's exposure to each currency based on their
perception of the most favorable markets and issuers. The percentage of the
Portfolio's assets invested in securities of a particular country or denominated
in a particular currency will vary in accordance with the advisers' assessment
of the relative yield and appreciation potential of such securities and the
current and anticipated relationship of a country's currency to the U.S. dollar.
Fundamental economic strength, earnings growth, quality of management, industry
growth, credit quality and interest rate trends are some of the principal
factors which may be considered by the Portfolio's advisers in determining
whether to increase or decrease the emphasis placed upon a particular type of
security, industry sector, country or currency within the Portfolio's investment
portfolio. In selecting countries and currencies for investment, the advisers
will also consider factors such as interest and inflation rates, monetary and
fiscal policies, taxation and political climate. Securities purchased by the
Portfolio may be denominated in a currency other than that of the country in
which the issuer is domiciled.
The Portfolio intends to invest in fixed income securities of issuers
located in the U.S., Australia, Austria, the United Kingdom, Canada, France,
Germany, Holland, Japan, New Zealand, Spain, Sweden and Switzerland, and such
other countries as the Portfolio's advisers may determine from time to time.
Investments may also be made in issuers in developing countries. The Portfolio
will not invest more than 25% of its net assets in debt securities of issuers
located in a single country or denominated in a single currency, other than
issuers located in or debt securities denominated in the currencies of the U.S.,
Canada, France, Germany, Japan or the United Kingdom. The Portfolio will not
invest more than 25% of its net assets in debt securities issued by a single
foreign government or supranational organization.
There is no restriction on the maturity of the Portfolio's portfolio or any
individual portfolio security. The Portfolio's advisers may adjust the average
maturity of the Portfolio's portfolio based upon their assessment of the
relative yields available on securities of different maturities and their
expectations of future changes in interest rates.
The Portfolio is classified as a "non-diversified" fund under federal
securities law. The Portfolio's assets may be more concentrated in the
securities of any single issuer or group of issuers than if the Portfolio were
diversified.
The Portfolio may invest any portion of its assets not invested as described
above in high quality money market instruments and repurchase agreements. For
temporary defensive purposes, the Portfolio may invest without
-6-
<PAGE>
limitation in these instruments. To the extent that the Portfolio departs from
its investment policies during temporary defensive periods, the Fund's
investment objective may not be achieved.
Fund Structure
The Portfolio has an objective identical to that of the Fund. The Fund may
withdraw its investment from the Portfolio at any time if the Trustees determine
that it is in the best interest of the Fund to do so. Upon any such withdrawal,
the Trustees would consider what action might be taken, including investing all
of the Fund's investable assets in another pooled investment entity having
substantially the same objective and policies as the Fund or retaining an
investment adviser to manage the Fund's assets directly.
Other Investment Practices
The Portfolio may also engage in the following investment practices, when
consistent with the Portfolio's overall objective and policies. These practices,
and certain associated risks, are more fully described in the SAI.
Interest Rate and Currency Transactions. The Portfolio will actively employ
currency and interest rate management techniques, including transactions in
options (including yield curve options), futures, options on futures, forward
foreign currency exchange contracts, currency options and futures and currency
and interest rate swaps. The aggregate amount of the Portfolio's net currency
exposure will not exceed the total net asset value of its portfolio. However, to
the extent that the Portfolio is fully invested in fixed income securities while
also maintaining currency positions, it may be exposed to greater combined risk.
The Portfolio will only enter into interest rate and currency swaps on a net
basis, i.e., the two payment streams are netted out, with the Portfolio
receiving or paying, as the case may be, only the net amount of the two
payments. Interest rate and currency swaps do not involve the delivery of
securities, the underlying currency, other underlying assets or principal.
Accordingly, the risk of loss with respect to interest rate and currency swaps
is limited to the net amount of interest or currency payments that the Portfolio
is contractually obligated to make. If the other party to an interest rate or
currency swap defaults, the Portfolio's risk of loss consists of the net amount
of interest or currency payments that the Portfolio is contractually entitled to
receive. Since interest rate and currency swaps are individually negotiated, the
Portfolio expects to achieve an acceptable degree of correlation between its
portfolio investments and its interest rate or currency swap positions.
The Portfolio may hold foreign currency received in connection with
investments in foreign securities when it would be beneficial to convert such
currency into U.S. dollars at a later date, based on anticipated changes in the
relevant exchange rate.
The Portfolio may purchase or sell without limitation forward foreign
currency exchange contracts when the Portfolio's advisers anticipate that the
foreign currency will appreciate or depreciate in value, but securities
denominated in that currency do not present attractive investment opportunities
and are not held by the Portfolio. In addition, the Portfolio may enter into
forward foreign currency exchange contracts in order to protect against adverse
changes in future foreign currency exchange rates. The Portfolio may engage in
cross-hedging by using forward contracts in one currency to hedge against
fluctuations in the value of securities denominated in a different currency if
the advisers believe that there is a pattern of correlation between the two
currencies.
The Portfolio may enter into interest rate and currency swaps to the maximum
allowed limits under applicable law. The Portfolio will typically use interest
rate swaps to shorten the effective duration of its portfolio. Interest rate
swaps involve the exchange by the Portfolio with another party of their
respective commitments to pay or
-7-
<PAGE>
receive interest, such as an exchange of fixed rate payments for floating rate
payments. Currency swaps involve the exchange of their respective commitments to
make or receive payments in specified currencies.
Investment Grade Debt Securities. Investment grade debt securities are
securities rated in the category BBB or higher by Standard & Poor's Corporation
("S&P"), or Baa or higher by Moody's Investors Services, Inc. ("Moody's") or the
equivalent by another national rating organization, or, if unrated, determined
by the advisers to be of comparable quality.
High Yield, High Risk Debt Securities. The Portfolio may invest up to 25%
of its total assets in high yield, high risk non-investment grade debt
securities primarily issued by issuers based in developing countries. The
Portfolio will not invest in securities rated, at the time of purchase, lower
than BB by S&P or Ba by Moody's or determined by the advisers to be of
comparable quality. Securities rated BB by S&P or Ba by Moody's have
speculative elements and uncertainties or major risk exposures to adverse
conditions. The Portfolio will not necessarily dispose of a security when its
rating is reduced below its rating at the time of purchase, although the
advisers will monitor the investment to determine whether continued investment
in the security will assist in meeting the Portfolio's investment objective.
Money Market Instruments. The Portfolio may invest in cash or high-quality,
short-term money market instruments. Such instruments may include U.S.
Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Supranational, ECU and Multicurrency Obligations. The Portfolio may invest
in securities issued by supranational organizations, which include organizations
such as The World Bank, the European Community, the European Coal and Steel
Community and the Asian Development Bank. The Portfolio may also invest in
securities denominated in the ECU, which is a "basket" consisting of specified
amounts of the currencies of certain member states of the European Community.
These securities are typically issued by European governments and supranational
organizations. In addition, the Portfolio may invest in securities denominated
in other currency "baskets." Currency "baskets" in which the Portfolio invests
will be of comparable quality to other debt securities purchased by the
Portfolio as determined by its advisers.
Indexed Investments. The Portfolio may invest in instruments which are
indexed to certain specific foreign currency exchange rates. The terms of such
instruments may provide that their principal amounts or just their coupon
interest rates are adjusted upwards or downwards (but not below zero) at
maturity or on established coupon payment dates to reflect changes in the
exchange rate between two or more currencies while the obligation is
outstanding. Such indexed investments entail the risk of loss of principal
and/or interest payments from currency movements in addition to principal risk,
but offer the potential for realizing gains as a result of changes in foreign
currency exchange rates.
Inverse Floaters and Interest Rate Caps. The Portfolio may invest in
inverse floaters and in securities with interest rate caps. Inverse floaters are
instruments whose interest rates bear an inverse relationship to the interest
rate on another security or the value of an index, and their price may be
considerably more volatile than a fixed-rate security. Interest rate caps are
financial instruments under which payments occur if an interest rate index
exceeds a certain predetermined interest rate level, known as the cap rate,
which is tied to a specific index. These financial products will be more
volatile in price than securities which do not include such a structure.
Repurchase Agreements, Securities Loans and Forward Commitments. The
Portfolio may enter into agreements to purchase and resell securities at an
agreed-upon price and time. The Portfolio also has the ability to lend portfolio
securities in an amount equal to not more than 30% of its total assets to
generate additional income. These transactions must be fully collateralized at
all times. The Portfolio may purchase securities for delivery at a future date,
which may increase its overall investment exposure and involves a risk of loss
if the value of the securities declines prior to the settlement date. These
transactions involve some risk to the Portfolio if the other party should
default on its obligation and the Portfolio is delayed or prevented from
recovering the collateral or completing the transaction.
-8-
<PAGE>
Borrowings and Reverse Repurchase Agreements. The Portfolio may borrow money
from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Portfolio may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Portfolio enters into a reverse repurchase agreement,
it will establish a segregated account in which it will maintain liquid assets
on a daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Portfolio would be required to pay interest on amounts
obtained through reverse repurchase agreements, which are considered borrowings
under federal securities laws.
Stand-By Commitments. The Portfolio may enter into put transactions,
including transactions sometimes referred to as stand-by commitments, with
respect to securities in its portfolio. In these transactions, the Portfolio
would acquire the right to sell a security at an agreed upon price within a
specified period prior to its maturity date. These transactions involve some
risk to the Portfolio if the other party should default on its obligation and
the Portfolio is delayed or prevented from recovering the collateral or
completing the transaction. Acquisition of puts will have the effect of
increasing the cost of the securities subject to the put and thereby reducing
the yields otherwise available from such securities.
Zero Coupon Securities, Payment-in-Kind Obligations and Stripped
Obligations. The Portfolio may invest in zero coupon securities issued by
governmental and private issuers. Zero coupon securities are debt securities
that do not pay regular interest payments, and instead are sold at substantial
discounts from their value at maturity. Payment-in-kind obligations are
obligations on which the interest is payable in additional securities rather
than cash. The Portfolio may also invest in stripped obligations, which are
separately traded principal and interest components of an underlying obligation.
The value of these instruments tends to fluctuate more in response to changes in
interest rates than the value of ordinary interest-paying debt securities with
similar maturities. The risk is greater when the period to maturity is longer.
Floating and Variable Rate Securities; Participation Certificates. The
Portfolio may invest in floating rate securities, whose interest rates adjust
automatically whenever a specified interest rate changes, and variable rate
securities, whose interest rates are periodically adjusted. Certain of these
instruments permit the holder to demand payment of principal and accrued
interest upon a specified number of days' notice from either the issuer or a
third party. The securities in which the Portfolio may invest include
participation certificates and certificates of indebtedness or safekeeping.
Participation certificates are pro rata interests in securities held by others;
certificates of indebtedness or safekeeping are documentary receipts for such
original securities held in custody by others. As a result of the variable rate
nature of these investments, the Portfolio's yield may decline and it may forego
the opportunity for capital appreciation during periods when interest rates
decline; however, during periods when interest rates increase, the Portfolio's
yield may increase and it may have reduced risk of capital depreciation. Demand
features on certain floating or variable rate securities may obligate the
Portfolio to pay a "tender fee" to a third party. Demand features provided by
foreign banks involve certain risks associated with foreign investments.
Mortgage-Related Securities. The Portfolio may invest in mortgage-related
securities. Mortgage pass-through securities are securities representing
interests in "pools" of mortgages in which payments of both interest and
principal on the securities are made monthly, in effect "passing through"
monthly payments made by the individual borrowers on the residential mortgage
loans which underlie the securities. Early repayment of principal on mortgage
pass-through securities held by the Portfolio (due to prepayments of principal
on the underlying mortgage loans) may result in a lower rate of return when the
Portfolio reinvests such principal. In addition, if the Portfolio purchased the
securities at a premium, early repayment would cause the value of the premium to
be lost. Like other fixed-income securities, when interest rates rise the value
of a mortgage-related security generally will decline; however, when interest
rates decline, the value of mortgage-related securities with prepayment features
may not increase as much as other fixed-income securities.
Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by the
U.S. Government, or by agencies or instrumentalities of the U.S. Government
(which guarantees are supported only by the discretionary authority of the U.S.
Government to
-9-
<PAGE>
purchase the agency's obligations). Mortgage pass-through securities created by
nongovernmental issuers may be supported by various forms of insurance or
guarantees.
The Portfolio may also invest in investment grade Collateralized Mortgage
Obligations ("CMOs"), which are hybrid instruments with characteristics of both
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal on a CMO are paid, in most cases, monthly. CMOs
may be collateralized by whole mortgage loans but are more typically
collateralized by portfolios of mortgage pass-through securities guaranteed by
the U.S. Government or its agencies or instrumentalities. CMOs are structured
into multiple classes, with each class having a different expected average life
and/or stated maturity. Monthly payments of principal, including prepayments,
are allocated to different classes in accordance with the terms of the
instruments, and changes in prepayment rates or assumptions may significantly
affect the expected average life and value of a particular class.
The Portfolio expects that governmental, government-related or private
entities may create other mortgage-related securities in addition to those
described above. As new types of mortgage-related securities are developed and
offered to investors, the Portfolio will consider making investments in such
securities.
Asset-Backed Securities. The Portfolio may invest in asset-backed
securities, which represent a participation in, or are secured by and payable
from, a stream of payments generated by particular assets, most often a pool of
assets similar to one another, such as motor vehicle receivables or credit card
receivables.
Other Investment Companies. The Portfolio may invest up to 10% of its
total assets in shares of other investment companies, subject to applicable
regulatory limitations.
Derivatives and Related Instruments. The Portfolio may invest its assets in
derivative and related instruments to hedge various market risks or to increase
the Portfolio's income or gain. Some of these instruments will be subject to
asset segregation requirements to cover the Portfolio's obligations. The
Portfolio may (i) purchase, write and exercise call and put options on
securities and securities indexes (including using options in combination with
securities, other options or derivative instruments); (ii) enter into swaps,
futures contracts and options on futures contracts; (iii) employ forward
currency and interest rate contracts; (iv) purchase and sell mortgage-backed and
asset-backed securities; and (v) purchase and sell structured products, which
are instruments designed to restructure or reflect the characteristics of
certain other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Portfolio invests may be particularly sensitive to changes in prevailing
economic conditions and market value. The ability of the Portfolio to
successfully utilize these instruments may depend in part upon the ability of
the Portfolio's advisers to forecast these factors correctly. Inaccurate
forecasts could expose the Portfolio to a risk of loss. There can be no
guarantee that there will be a correlation between price movements in a hedging
instrument and in the portfolio assets being hedged. The Portfolio is not
required to use any hedging strategies. Hedging strategies, while reducing risk
of loss, can also reduce the opportunity for gain. Derivatives transactions not
involving hedging may have speculative characteristics, involve leverage and
result in more risk to the Portfolio than hedging strategies using the same
instruments. There can be no assurance that a liquid market will exist at a time
when the Portfolio seeks to close out a derivatives position. Activities of
large traders in the futures and securities markets involving arbitrage,
"program trading," and other investment strategies may cause price distortions
in derivatives markets. In certain instances, particularly those involving
over-the-counter transactions or forward contracts, there is a greater potential
that a counterparty or broker may default. In the event of a default, the
Portfolio may experience a loss. For additional information concerning
derivatives, related instruments and the associated risks, see the SAI.
Portfolio Turnover. The frequency of the Portfolio's portfolio transactions
will vary from year to year. The Portfolio's investment policies may lead to
frequent changes in investments, particularly in periods of rapidly changing
market conditions. High portfolio turnover rates would generally result in
higher transaction costs, including brokerage commissions or dealer mark-ups,
and would make it more difficult for the Portfolio to qualify as a registered
investment company under federal tax law. See "How Distributions are Made; Tax
Information" and "Other Information Concerning the Fund -- Certain Regulatory
Matters."
Limiting Investment Risks
-10-
<PAGE>
Specific investment restrictions help the Portfolio limit investment risks
for the Fund's shareholders. These restrictions prohibit the Portfolio from: (a)
with respect to 50% of its total assets, holding more than 10% of the voting
securities of any issuer; (b) investing more than 15% of its net assets in
illiquid securities (which include securities restricted as to resale unless
they are determined to be readily marketable in accordance with procedures
established by the Board of Trustees); or (c) investing more than 25% of its
total assets in any one industry. A complete description of these and other
investment policies is included in the SAI. Except for the Fund's investment
objective, restriction (c) above and investment policies designated as
fundamental in the SAI, the investment policies of the Portfolio and the Fund
are not fundamental. Shareholder approval is not required to change any non-
fundamental investment policy. However, in the event of a change in the
Portfolio's investment objective, shareholders will be given at least 30 days
prior written notice and the Board of Trustees will consider what action may be
appropriate.
Risk Factors
The net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities held by the Portfolio. The Portfolio is
aggressively managed and, as it invests in both U.S. and foreign fixed income
securities, the value of the Fund's shares is subject to greater fluctuation and
an investment in its shares involves a higher degree of risk than an investment
in a fund investing entirely in U.S. investment grade fixed income securities.
An investment in the Fund should not be considered a complete investment program
and may not be appropriate for all investors.
The performance of the Portfolio depends in part on interest rate changes.
As interest rates increase, the value of the fixed income securities held by the
Portfolio tends to decrease. This effect will be more pronounced with respect to
investments by the Portfolio in mortgage-related securities, the value of which
are more sensitive to interest rate changes. There is no restriction on the
maturity of the Portfolio's portfolio or any individual portfolio security, and
to the extent the Portfolio invests in securities with longer maturities, the
volatility of the Portfolio in response to changes in interest rates can be
expected to be greater than if the Portfolio had invested in comparable
securities with shorter maturities.
Since foreign securities are normally denominated and traded in foreign
currencies, the values of the Portfolio's foreign investments may be affected
favorably or unfavorably by currency exchange rates and exchange control
regulations. There may be less information publicly available about foreign
companies than U.S. companies, and they are not generally subject to accounting,
auditing and financial reporting standards and practices comparable to those in
the U.S. The securities of foreign companies may be less liquid and more
volatile than the securities of comparable U.S. companies. Foreign settlement
procedures and trade regulations may involve certain risks (such as delay in
payment or delivery of securities or in the recovery of the Portfolio's assets
held abroad) and expenses. It is possible that nationalization or expropriation
of assets, imposition of currency exchange controls, confiscatory taxation,
political or financial instability and diplomatic developments could affect the
value of the Portfolio's investments in certain foreign countries. Foreign laws
may restrict the ability to invest in certain issuers or countries and special
tax considerations will apply to foreign securities.
Investments in securities of issuers based in developing countries entails
certain additional risks, including greater risks of expropriation, confiscatory
taxation, nationalization, and less social, political and economic stability.
The small size of markets for securities of issuers based in such countries and
the low or non-existent volume of trading may result in a lack of liquidity and
in price volatility. Certain national policies may restrict the investment
opportunities, including restrictions on investing in issuers or industries
deemed sensitive to relevant national interests. There may be an absence of
developed legal structures governing private or foreign investment and private
property.
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The Portfolio may invest in both higher-rated and lower-rated fixed-income
securities. The values of lower-rated securities generally fluctuate more than
those of higher-rated securities. In addition, the lower rating reflects a
greater possibility that the financial condition of the issuer, adverse changes
in economic conditions, or both may impair the ability of an issuer to make
payments of income and principal. Securities rated BB by S&P or Ba by Moody's
have speculative elements and uncertainties or major risk exposures to adverse
conditions. The rating services' descriptions of securities in the various
rating categories, including the speculative characteristics of securities in
the lower rating categories, are set forth in the SAI. Investors should
carefully consider their ability to assume the risks of owning shares of the
Fund in light of the Portfolio's ability to invest a portion of its assets in
securities in certain of the lower rating categories.
Because the Portfolio is "non-diversified," the value of the Fund's shares
is more susceptible to developments affecting issuers in which the Portfolio
invests.
For a discussion of certain other risks associated with the Portfolio's
additional investment activities, see "Other Investment Practices" above.
MANAGEMENT
The Portfolio's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the
Portfolio pursuant to an Investment Advisory Agreement and has overall
responsibility for investment decisions of the Portfolio, subject to the
oversight of the Board of Trustees. Chase is a wholly-owned subsidiary of The
Chase Manhattan Corporation, a bank holding company. Chase and its predecessors
have over 100 years of money management experience. For its investment advisory
services to the Portfolio, Chase is entitled to receive an annual fee computed
daily and paid monthly based at an annual rate equal to 0.75% of the
Portfolio's average daily net assets. Chase is located at 270 Park Avenue, New
York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Portfolio pursuant to a Sub-Investment
Advisory Agreement between CAM and Chase. CAM is a wholly-owned operating
subsidiary of Chase. CAM makes investment decisions for the Portfolio on a
day-to-day basis. For these services, CAM is entitled to receive a fee, payable
by Chase from its advisory fee, at an annual rate equal to 0.35% of the
Portfolio's average daily net assets. CAM was recently formed for the purpose of
providing discretionary investment advisory services to institutional clients
and to consolidate Chase's investment management function. The same individuals
who serve as portfolio managers for Chase also serve as portfolio managers for
CAM. CAM is located at 1211 Avenue of the Americas, New York, New York 10036.
Portfolio Manager. Gordon Ross has been responsible for the day-to-day
management of the Portfolio since he joined Chase in June 1994. Mr. Ross is Vice
President and head of global fixed income management for Chase. Before joining
Chase, Mr. Ross was Director of Investments at Lombard Odier & Co. Ltd., where
he managed institutional global portfolios and was co-chairman of global
strategy. Previously, Mr. Ross spent four years as a proprietary trader at J.P.
Morgan Inc. and Manufacturers Hanover Ltd., both in London.
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ABOUT YOUR INVESTMENT
Alternative Sales Arrangements
Class A shares. An investor who purchases Class A shares pays a sales charge
at the time of purchase. As a result, Class A shares are not subject to any
sales charges when they are redeemed. Certain purchases of Class A shares
qualify for reduced sales charges. Class A shares have lower combined 12b-1 and
service fees than Class B shares. See "How to Buy, Sell and Exchange Shares" and
"Other Information Concerning the Fund."
Class B shares. Class B shares are sold without an initial sales charge, but
are subject to a contingent deferred sales charge ("CDSC") if redeemed within a
specified period after purchase. Class B shares also have higher combined 12b-1
and service fees than Class A shares.
Class B shares automatically convert into Class A shares, based on relative
net asset value, at the beginning of the ninth year after purchase. For more
information about the conversion of Class B shares, see the SAI. This discussion
will include information about how shares acquired through reinvestment of
distributions are treated for conversion purposes. Class B shares provide an
investor the benefit of putting all of the investor's dollars to work from the
time the investment is made. Until conversion, Class B shares will have a higher
expense ratio and pay lower dividends than Class A shares because of the higher
combined 12b-1 and service fees. See "How to Buy, Sell and Exchange Shares" and
"Other Information Concerning the Fund."
Which arrangement is best for you? The decision as to which class of
shares provides a more suitable investment for an investor depends on a number
of factors, including the amount and intended length of the investment.
Investors making investments that qualify for reduced sales charges might
consider Class A shares. Investors who prefer not to pay an initial sales charge
might consider Class B shares. In almost all cases, investors planning to
purchase $250,000 or more of the Fund's shares will pay lower aggregate charges
and expenses by purchasing Class A shares.
HOW TO BUY, SELL AND EXCHANGE SHARES
How to Buy Shares
You can open a Fund account with as little as $2,500 ($1,000 for IRAs,
SEP-IRAs and the Systematic Investment Plan) and make additional investments at
any time with as little as $100. You can buy Fund shares three ways--through an
investment representative, through the Fund's distributor by calling the Vista
Service Center, or through the Systematic Investment Plan.
All purchases made by check should be in U.S. dollars and made payable to
the Vista Funds. Third party checks, credit cards and cash will not be accepted.
The Fund reserves the right to reject any purchase order or cease offering
shares for purchase at any time. When purchases are made by check, redemptions
will not be allowed until clearance of the purchase check, which may take 15
calendar days or longer. In addition, the redemption of shares purchased through
ACH will not be allowed until clearance of your payment, which may take 7
business days or longer.
Buying shares through the Fund's distributor. Complete and return the
enclosed application and your check in the amount you wish to invest to the
Vista Service Center.
Buying shares through systematic investing. You can make regular investments
of $100 or more per transaction through automatic periodic deduction from your
bank checking or savings account. Shareholders electing to start this
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Systematic Investment Plan when opening an account should complete Section 8 of
the account application. Current shareholders may begin such a plan at any time
by sending a signed letter with signature guarantee and a deposit slip or voided
check to the Vista Service Center. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Shares are sold at the public offering price based on the net asset value
next determined after the Vista Service Center receives your order in proper
form. In most cases, in order to receive that day's public offering price, the
Vista Service Center must receive your order before the close of regular trading
on the New York Stock Exchange. If you buy shares through your investment
representative, the representative must receive your order before the close of
regular trading on the New York Stock Exchange to receive that day's public
offering price. Orders for shares are accepted by the Fund after funds are
converted to federal funds. Orders paid by check and received by 2:00 p.m.,
Eastern Time will generally be available for the purchase of shares the
following business day.
If you are considering redeeming or exchanging shares or transferring
shares to another person shortly after purchase, you should pay for those shares
with a certified check to avoid any delay in redemption, exchange or transfer.
Otherwise the Fund may delay payment until the purchase price of those shares
has been collected or, if you redeem by telephone, until 15 calendar days after
the purchase date. To eliminate the need for safekeeping, the Fund will not
issue certificates for your Class A shares unless you request them. Due to the
conversion feature of Class B shares, certificates for Class B shares will not
be issued and all Class B shares will be held in book entry form.
Class A Shares
The public offering price of Class A shares is the net asset value plus a
sales charge that varies depending on the size of your purchase. The Fund
receives the net asset value. The sales charge is allocated between your
broker-dealer and the Fund's distributor as shown in the following table,
except when the Fund's distributor, in its discretion, allocates the entire
amount to your broker-dealer.
- -------------------------------------------------------------------------------
Sales charge as a
percentage of: Amount of sales charge
Amount of transaction at Offering Net amount reallowed to dealers as a
offering price($) price invested percentage of offering price
- -------------------------------------------------------------------------------
Under 100,000 4.50 4.71 4.00
- -------------------------------------------------------------------------------
100,000 but under 250,000 3.75 3.90 3.25
- -------------------------------------------------------------------------------
250,000 but under 500,000 2.50 2.56 2.25
- -------------------------------------------------------------------------------
500,000 but under 1,000,000 2.00 2.04 1.75
- -------------------------------------------------------------------------------
There is no initial sales charge on purchases of Class A shares of $1
million or more.
The Fund's distributor pays broker-dealers commissions on net sales of
Class A shares of $1 million or more based on an investor's cumulative
purchases. Such commissions are paid at the rate of 0.75% of the amount under
$2.5 million, 0.50% of the next $7.5 million, 0.25% of the next $40 million and
0.15% thereafter. The Fund's distributor may withhold such payments with respect
to short-term investments.
Class B Shares
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Class B shares are sold without an initial sales charge, although a CDSC
will be imposed if you redeem shares within a specified period after purchase,
as shown in the table below. The following types of shares may be redeemed
without charge at any time: (i) shares acquired by reinvestment of distributions
and (ii) shares otherwise exempt from the CDSC, as described below. For other
shares, the amount of the charge is determined as a percentage of the lesser of
the current market value or the purchase price of shares being redeemed.
Year 1 2 3 4 5 6 7 8+
- --------------------------------------------------------------
CDSC 5% 4% 3% 3% 2% 1% 0% 0%
In determining whether a CDSC is payable on any redemption, the Fund
will first redeem shares not subject to any charge, and then shares held longest
during the CDSC period. When a share that has appreciated in value is redeemed
during the CDSC period, a CDSC is assessed only on its initial purchase price.
For information on how sales charges are calculated if you exchange your shares,
see "How to Exchange Your Shares." The Fund's distributor pays broker-dealers a
commission of 4.00% of the offering price on sales of Class B shares, and the
distributor receives the entire amount of any CDSC you pay.
General
You may be eligible to buy Class A shares at reduced sales charges. Consult
your investment representative or the Vista Service Center for details about
Vista's combined purchase privilege, cumulative quantity discount, statement of
intention, group sales plan, employee benefit plans, and other plans.
Descriptions are also included in the enclosed application and in the SAI. In
addition, sales charges will not apply to shares purchased with redemption
proceeds received within the prior ninety days from non-Vista mutual funds on
which the investor paid a front-end or contingent deferred sales charge.
A participant-directed employee benefit plan participating in a
"multi-fund" program approved by the Board of Trustees may include amounts
invested in the other mutual funds participating in such program for purposes of
determining whether the plan may purchase Class A shares at net asset value.
These investments will also be included for purposes of the discount privileges
and programs described above.
The Fund may sell Class A shares at net asset value without an initial
sales charge to the current and retired Trustees (and their immediate families),
current and retired employees (and their immediate families) of Chase, the
Fund's distributor and transfer agent or any affiliates or subsidiaries thereof,
registered representatives and other employees (and their immediate families) of
broker-dealers having selected dealer agreements with the Fund's distributor,
employees (and their immediate families) of financial institutions having
selected dealer agreements with the Fund's distributor (or otherwise having an
arrangement with a broker-dealer or financial institution with respect to sales
of Vista fund shares) financial institution trust departments investing an
aggregate of $1 million or more in the Vista Family of Funds and clients of
certain administrators of tax-qualified plans when proceeds from repayments of
loans to participants are invested (or reinvested) in the Vista Family of Funds.
No initial sales charge will apply to the purchase of Class A shares of
the Fund by an investor seeking to invest the proceeds of a qualified retirement
plan where a portion of the plan was invested in the Vista Family of Funds, any
qualified retirement plan with 50 or more participants, or an individual
participant in a tax-qualified plan making a tax-free rollover or transfer of
assets from the plan in which Chase or an affiliate serves as trustee or
custodian of the plan or manages some portion of the plan's assets.
Purchases of Class A shares of the Fund may be made with no initial sales
charge through an investment adviser or financial planner that charges a fee for
its services. Purchases of Class A shares of the Fund may be made with no
initial sales charge (i) by an investment adviser, broker or financial planner,
provided arrangements are preapproved and purchases are placed through an
omnibus account with the Fund or (ii) by clients of such
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<PAGE>
investment adviser or financial planner who place trades for their own accounts,
if such accounts are linked to a master account of such investment adviser or
financial planner on the books and records of the broker or agent. Such
purchases may be made for retirement and deferred compensation plans and trusts
used to fund those plans.
Purchases of Class A shares of the Fund may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary exercising investment discretion, provided that
appropriate notification of such fiduciary relationship is reported at the time
of the investment to the Fund, the Fund's distributor or the Vista Service
Center.
Shareholders of record of any Vista fund as of November 30, 1990 and
certain immediate family members may purchase Class A shares of the Fund with no
initial sales charge for as long as they continue to own Class A shares of any
Vista fund, provided there is no change in account registration. Shareholders of
record of any portfolio of The Hanover Funds, Inc. or The Hanover Investment
Funds, Inc. as of May 3, 1996 and certain related investors may purchase Class A
shares of the Fund with no initial sales charge for as long as they continue to
own shares of any Vista fund following this date, provided there is no change in
account registration.
The Fund may sell Class A shares at net asset value without an initial
sales charge in connection with the acquisition by the Fund of assets of an
investment company or personal holding company. The CDSC will be waived on
redemption of Class B shares arising out of death or disability or in connection
with certain withdrawals from IRA or other retirement plans. Up to 12% of the
value of Class B shares subject to a systematic withdrawal plan may also be
redeemed each year without a CDSC, provided that the Class B account had a
minimum balance of $20,000 at the time the systematic withdrawal plan was
established. The SAI contains additional information about purchasing the
Fund's shares at reduced sales charges.
The Fund reserves the right to change any of these policies on purchases
without an initial sales charge at any time and may reject any such purchase
request.
Shareholders of other Vista funds may be entitled to exchange their shares
for, or reinvest distributions from their funds in, shares of the Fund at net
asset value.
How to Sell Shares
You can sell your shares to the Fund any day the New York Stock Exchange is
open, either directly to the Fund or through your investment representative. The
Fund will only forward redemption payments on shares for which it has collected
payment of the purchase price.
Selling shares directly to the Fund. Send a signed letter of instruction
to the Vista Service Center, along with any certificates that represent shares
you want to sell. The price you will receive is the next net asset value
calculated after the Fund receives your request in proper form, less any
applicable CDSC. In order to receive that day's net asset value, the Vista
Service Center must receive your request before the close of regular trading on
the New York Stock Exchange.
If you sell shares having a net asset value of $100,000 or more, the
signatures of registered owners or their legal representatives must be
guaranteed by a bank, broker-dealer or certain other financial institutions. See
the SAI for more information about where to obtain a signature guarantee.
If you want your redemption proceeds sent to an address other than your
address as it appears on Vista's records, a signature guarantee is required. The
Fund may require additional documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Vista Service Center for details.
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<PAGE>
The Fund generally sends you payment for your shares the business day after
your request is received, assuming the Fund has collected payment of the
purchase price of your shares. Under unusual circumstances, the Fund may suspend
redemptions, or postpone payment for more than seven days, as permitted by
federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request, as described above,
or contact your investment representative. The Telephone Redemption Privilege is
not available if you were issued certificates for shares that remain
outstanding. The Telephone Redemption Privilege may be modified or terminated
without notice.
Systematic withdrawal. You can make regular withdrawals of $50 or more
($100 or more for Class B accounts) monthly, quarterly or semiannually. A
minimum account balance of $5,000 is required to establish a systematic
withdrawal plan for Class A accounts. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Selling shares through your investment representative. Your investment
representative must receive your request before the close of regular trading on
the New York Stock Exchange to receive that day's net asset value. Your
investment representative will be responsible for furnishing all necessary
documentation to the Vista Service Center, and may charge you for its services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $500 or if you purchase through the Systematic Investment
Plan and fail to meet the Fund's investment minimum within a twelve month
period. In the event of any such redemption, you will receive at least 60 days
notice prior to the redemption. In the event the Fund redeems Class B shares
pursuant to this provision, no CDSC will be imposed.
How to Exchange Your Shares
You can exchange your shares for shares of the same class of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer all classes of shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully and retained for
future reference. If you exchange shares subject to a CDSC, the transaction will
not be subject to the CDSC. However, when you redeem the shares acquired through
the exchange, the redemption may be subject to the CDSC, depending upon when you
originally purchased the shares. The CDSC will be computed using the schedule of
any fund into or from which you have exchanged your shares that would result in
your paying the highest CDSC applicable to your class of shares. In computing
the CDSC, the length of time you have owned your shares will be measured from
the date of original purchase and will not be affected by any exchange.
An exchange of Class B shares into any of the Vista money market funds
other than the Class B shares of the Vista Prime Money Market Fund will be
treated as a redemption -- and therefore subject to the conditions of the CDSC
- -- and a subsequent purchase. Class B shares of any Vista non-money market fund
may be exchanged
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<PAGE>
into the Class B shares of the Vista Prime Money Market Fund in order to
continue the aging of the initial purchase of such shares.
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term trading.
Excessive exchange activity may interfere with portfolio management and have an
adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the amount or
number of exchanges or reject any exchange. In addition, any shareholder who
makes more than ten exchanges of shares involving the Fund in a year or three in
a calendar quarter will be charged a $5.00 administration fee for each such
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult the Vista Service Center before requesting an exchange.
See the SAI to find out more about the exchange privilege.
Reinstatement privilege. Class A shareholders have a one time privilege of
reinstating their investment in the Fund at net asset value next determined
subject to written request within 90 calendar days of the redemption,
accompanied by payment for the shares (not in excess of the redemption). Class B
shareholders who have redeemed their shares and paid a CDSC with such redemption
may purchase Class A shares with no initial sales charge (in an amount not in
excess of their redemption proceeds) if the purchase occurs within 90 days of
the redemption of the Class B shares.
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each business day of the Fund, by
dividing the net assets of the Fund attributable to that class by the total
number of outstanding shares of that class. Values of assets held by the Fund
(i.e., the value of its investment in the Portfolio and its other assets) are
determined on the basis of their market or other fair value, as described in the
SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund distributes any net investment income at least monthly and any
net realized capital gains at least annually. Distributions from capital gains
are made after applying any available capital loss carryovers. Distributions
paid by the Fund with respect to Class A shares will generally be greater than
those paid with respect to Class B shares because expenses attributable to Class
B shares will generally be higher.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares without a sales charge; (2) receive
distributions from net investment income in cash or by ACH to a pre-established
bank account while reinvesting capital gains distributions in additional shares
without a sales charge; or (3) receive all distributions in cash or by ACH. You
can change your distribution option by notifying the Vista Service Center in
writing. If you do not select an option when you open your account, all
distributions will be reinvested. All distributions not paid in cash or by ACH
will be reinvested in shares
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<PAGE>
of the class on which the distributions are paid. You will receive a statement
confirming reinvestment of distributions in additional Fund shares promptly
following the quarter in which the reinvestment occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Distribution Plans
The Fund's distributor is Vista Fund Distributors, Inc. ("VFD"). VFD is a
subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase. The Trust
has adopted Rule 12b-1 distribution plans for Class A and Class B shares which
provide that the Fund will pay distribution fees at annual rates of up to 0.25%
and 0.75% of the average daily net assets attributable to Class A and Class B
shares of the Fund, respectively. Payments under the distribution plans shall be
used to compensate or reimburse the Fund's distributor and broker-dealers for
services provided and expenses incurred in connection with the sale of Class A
and Class B shares, and are not tied to the amount of actual expenses incurred.
Payments may be used to compensate broker-dealers with trail or maintenance
commissions at an annual rate of up to 0.25% of the average daily net asset
value of Class A or Class B shares maintained in the Fund by customers of these
broker-dealers. Trail or maintenance commissions are paid to broker-dealers
beginning the 13th month following the purchase of shares by their customers.
Some activities intended to promote the sale of Class A and Class B shares will
be conducted generally by the Vista Family of Funds, and activities intended to
promote the Fund's Class A or Class B shares may also benefit the Fund's other
shares and other Vista funds.
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<PAGE>
VFD may provide promotional incentives to broker-dealers that meet
specified sales targets for one or more Vista funds. These incentives may
include gifts of up to $100 per person annually; an occasional meal, ticket to a
sporting event or theater or entertainment for broker-dealers and their guests;
and payment or reimbursement for travel expenses, including lodging and meals,
in connection with attendance at training and educational meetings within and
outside the U.S.
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Class A or Class B shares of the Fund. These
services include assisting with purchase and redemption transactions,
maintaining shareholder accounts and records, furnishing customer statements,
transmitting shareholder reports and communications to customers and other
similar shareholder liaison services. For performing these services, each
shareholder servicing agent receives an annual fee of up to 0.25% of the average
daily net assets of Class A and Class B shares of the Fund held by investors for
whom the shareholder servicing agent maintains a servicing relationship.
Shareholder servicing agents may subcontract with other parties for the
provision of shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator and Sub-Administrator
Chase acts as the Fund's administrator for the Fund and the Portfolio and
is entitled to receive from each of the Fund and the Portfolio a fee computed
daily and paid monthly at an annual rate equal to 0.05% of their respective
average daily net assets.
VFD provides certain sub-administrative services to the Fund pursuant to
a distribution and sub-administration agreement and is entitled to receive a
fee for these services from the Fund at an annual rate equal to 0.05% of the
Fund's average daily net assets. VFD has agreed to use a portion of this fee to
pay for certain expenses incurred in connection with organizing new series of
the Trust and certain other ongoing expenses of the Trust. VFD is located at
101 Park Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds
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<PAGE>
and securities and maintaining required books and accounts; expenses of
preparing and mailing reports to investors and to government offices and
commissions; expenses of meetings of investors; fees and expenses of independent
accountants, of legal counsel and of any transfer agent, registrar or dividend
disbursing agent of the Trust; insurance premiums; and expenses of calculating
the net asset value of, and the net income on, shares of the Fund. Shareholder
servicing and distribution fees are allocated to specific classes of the Fund.
In addition, the Fund may allocate transfer agency and certain other expenses by
class. Service providers to the Fund may, from time to time, voluntarily waive
all or a portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Shares have no
preemptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of the Fund generally vote
together except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class.
The Fund issues multiple classes of shares. This Prospectus relates to
Class A and Class B shares of the Fund. The Fund may offer other classes of
shares in addition to these classes. The categories of investors that are
eligible to purchase shares and minimum investment requirements may differ for
each class of Fund shares. In addition, other classes of Fund shares may be
subject to differences in sales charge arrangements, ongoing distribution and
service fee levels, and levels of certain other expenses, which would affect the
relative performance of the different classes. Investors may call 1-800-34-VISTA
to obtain additional information about other classes of shares of the Fund that
are offered. Any person entitled to receive compensation for selling or
servicing shares of the Fund may receive different levels of compensation with
respect to one class of shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Unique Characteristics of Master/Feeder Fund Structure
Unlike other mutual funds which directly acquire and manage their own
portfolio securities, the Fund invests all of its investable assets in the
Portfolio, a separate registered investment company. Therefore, a shareholder's
interest in the Portfolio's securities is indirect. In addition to selling a
beneficial interest to the Fund, the Portfolio may sell beneficial interests to
other mutual funds or institutional investors. Such investors will invest in the
Portfolio on the same terms and conditions and will pay a proportionate share of
the Portfolio's expenses. However, other investors investing in the Portfolio
are not required to sell their shares at the same public offering prices as the
Fund, and may bear different levels of ongoing expenses than the Fund.
Shareholders of the Fund should be aware that these differences may result in
differences in
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<PAGE>
returns experienced in the different funds that invest in the Portfolio. Such
differences in returns are also present in other mutual fund structures.
Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns. Additionally, the Portfolio
may become less diverse, resulting in increased portfolio risk. However, this
possibility also exists for traditionally structured funds which have large or
institutional investors. Funds with a greater pro rata ownership in the
Portfolio could have effective voting control of the operations of the
Portfolio. Whenever the Trust is requested to vote on matters pertaining to the
Portfolio, the Trust will hold a meeting of shareholders of the Fund and will
cast all of its votes in the same proportion as do the Fund's shareholders.
Shares of the Fund for which no voting instructions have been received will be
voted in the same proportion as those shares for which voting instructions are
received. Certain changes in the Portfolio's objective, policies or restrictions
may require the Trust to withdraw the Fund's interest in the Portfolio. Any
withdrawal could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution from the Portfolio). The Fund could incur
brokerage fees or other transaction costs in converting such securities to cash.
In addition, a distribution in kind may result in a less diversified portfolio
of investments or adversely affect the liquidity of the Fund.
State securities regulations generally do not permit the same individuals
who are disinterested Trustees of the Trust to be Trustees of the Portfolio
absent the adoption of written procedures by a majority of the disinterested
Trustees of the Trust reasonably appropriate to deal with potential conflicts of
interest up to and including creating a separate Board of Trustees. The Trustees
of the Trust, including a majority of the disinterested Trustees, have adopted
procedures they believe are reasonably appropriate to deal with any conflict of
interest up to and including creating a separate Board of Trustees.
Investors in the Fund may obtain information about whether an investment
in the Portfolio may be available through other funds by calling the Vista
Service Center at 1-800-34-VISTA.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their
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<PAGE>
own accounts in U.S. Government obligations, municipal obligations and
commercial paper and are among the leading dealers of various types of U.S.
Government obligations and municipal obligations. Chase and its affiliates may
sell U.S. Government obligations and municipal obligations to, and purchase them
from, other investment companies sponsored by the Fund's distributor or
affiliates of the distributor. Chase will not invest the Fund's assets in any
U.S. Government obligations, municipal obligations or commercial paper purchased
from itself or any affiliate, although under certain circumstances such
securities may be purchased from other members of an underwriting syndicate in
which Chase or an affiliate is a non-principal member. This restriction may
limit the amount or type of U.S. Government obligations, municipal obligations
or commercial paper available to be purchased by the Fund. Chase has informed
the Fund that in making its investment decisions, it does not obtain or use
material inside information in the possession of any other division or
department of Chase, including the division that performs services for the Fund
as custodian, or in the possession of any affiliate of Chase. Shareholders of
the Fund should be aware that, subject to applicable legal or regulatory
restrictions, Chase and its affiliates may exchange among themselves certain
information about the shareholder and his account. Transactions with affiliated
broker-dealers will only be executed on an agency basis in accordance with
applicable federal regulations.
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income calculated pursuant to federal rules per share
during a recent 30-day period by the maximum public offering price per share of
such class on the last day of that period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the maximum public offering price (in the case of Class A shares) or
reflecting the deduction of any applicable contingent deferred sales charge (in
the case of Class B shares). Total return may also be presented for other
periods or without reflecting sales charges. Any quotation of investment
performance not reflecting the maximum initial sales charge or contingent
deferred sales charge would be reduced if such sales charges were used.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other mutual
funds and other investment vehicles. Quotation of investment performance for any
period when a fee waiver or expense limitation was in effect will be greater
than if the waiver or limitation had not been in effect. The Fund's performance
may be compared to other mutual funds, relevant indices and rankings prepared by
independent services. See the SAI.
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<PAGE>
MAKE THE MOST OF YOUR VISTA PRIVILEGES
The following services are available to you as a Vista mutual fund shareholder.
o SYSTEMATIC INVESTMENT PLAN - Invest as much as you wish ($100 or more) in
the first or third week of any month. The amount will be automatically
transferred from your checking or savings account.
o SYSTEMATIC WITHDRAWAL - Make regular withdrawals of $50 or more ($100 or
more for Class B accounts) monthly, quarterly or semiannually. A minimum
account balance of $5,000 is required to establish a systematic withdrawal
plan for Class A accounts.
o SYSTEMATIC EXCHANGE - Transfer assets automatically from one Vista account
to another on a regular, prearranged basis. There is no additional charge
for this service.
o FREE EXCHANGE PRIVILEGE - Exchange money between Vista funds in the same
class of shares without charge. The exchange privilege allows you to
adjust your investments as your objectives change.
Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange and systematic withdrawal or exchange.
o REINSTATEMENT PRIVILEGE - Class A shareholders have a one time privilege
of reinstating their investment in the Fund at net asset value next
determined subject to written request within 90 calendar days of the
redemption, accompanied by payment for the shares (not in excess of the
redemption).
Class B shareholders who have redeemed their shares and paid a CDSC with
such redemption may purchase Class A shares with no initial sales charge
(in an amount not in excess of their redemption proceeds) if the purchase
occurs within 90 days of the redemption of the Class B shares.
For more information about any of these services and privileges, call your
shareholder servicing agent, investment representative or the Vista Service
Center at 1-800-34-VISTA. These privileges are subject to change or termination.
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<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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<PAGE>
PROSPECTUS
VISTA[SM] INTERNATIONAL EQUITY FUND
Class A and B Shares
May 6, 1996
Investment Strategy: Total Return
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-34-VISTA. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
The Fund, unlike many other investment companies which directly acquire and
manage their own portfolios of securities, seeks its investment objective by
investing all of its investable assets in International Equity Portfolio (the
"Portfolio"), an open-end management investment company with an investment
objective identical to those of the Fund. Investors should carefully consider
this investment approach. For additional information regarding this investment
structure, see "Unique Characteristics of Master/Feeder Fund Investment
Structure" on page __.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary.........................................................
The expenses you might pay on your Fund investment, including examples
Financial Highlights....................................................
How the Fund has performed
Fund Objective..........................................................
Investment Policies.....................................................
The kinds of securities in which the Fund invests,
investment policies and techniques, and risks
Management..............................................................
Chase Manhattan Bank, the Fund's adviser; Chase Asset Management,
the Fund's sub-adviser, and the individuals who manage the Fund
About Your Investment...................................................
Alternative sales arrangements
How to Buy, Sell and Exchange Shares....................................
How the Fund Values its Shares..........................................
How Distributions are Made; Tax Information.............................
How the Fund distributes its earnings, and
tax treatment related to those earnings
Other Information Concerning the Fund...................................
Distribution plans, shareholder servicing agents, administration,
custodian, expenses, organization, master/feeder Fund structure and
regulatory matters
Performance Information.................................................
How performance is determined, stated and/or advertised
Make the Most of Your Vista Privileges..................................
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<PAGE>
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the Fund based on
expenses incurred in the most recent fiscal year. The examples show the
cumulative expenses attributable to a hypothetical $1,000 investment over
specified periods.
Class A Class B
Shareholder Transaction Expenses Shares Shares
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price).................... 4.75% None
Maximum Deferred Sales Charge
(as a percentage of the lower of original
purchase price or redemption proceeds)(*).............. None 5.00%
Annual Fund Operating Expenses
(as a percentage of average net assets)................
Investment Advisory Fee (after estimated waiver) (**).. 0.00% 0.00%
12b-1 Fee(***)......................................... 0.25% 0.75%
Shareholder Servicing Fee.............................. 0.25% 0.25%
Other Expenses......................................... 1.50% 1.50%
----- -----
Total Fund Operating Expenses
(after waiver of fee) (**)........................... 2.00% 2.50%
===== =====
Examples
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares(+)................ $67 $107 $150 $269
Class B Shares:
Assuming complete
redemption at the
end of the
period(++)(+++)................ $77 $110 $156 $271
Assuming no
redemptions (+++).............. $25 $78 $133 $271
- -----------------------
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<PAGE>
* The maximum deferred sales charge on Class B shares applies to redemptions
during the first year after purchase; the charge generally declines by 1%
annually thereafter (except in the fourth year), reaching zero after six
years. See "How to Buy, Sell and Exchange Shares."
** Reflects current waiver arrangement to maintain Total Fund Operating
Expenses at the levels indicated in the table above. Absent such waiver, the
Investment Advisory Fee would be 1.00% for Class A and Class B shares, and
Total Fund Operating Expenses would be 3.00% and 3.50% for Class A and Class
B shares, respectively.
*** Long-term shareholders in mutual funds with 12b-1 fees, such as Class A and
Class B shareholders of the Fund, may pay more than the economic equivalent
of the maximum front-end sales charge permitted by rules of the National
Association of Securities Dealers, Inc.
+ Assumes deduction at the time of purchase of the maximum sales charge.
++ Assumes deduction at the time of redemption of the maximum applicable
deferred sales charge.
+++ Ten-year figures assume conversion of Class B shares to Class A shares at
the beginning of the ninth year after purchase. See "How to Buy, Sell and
Exchange Shares."
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
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<PAGE>
FINANCIAL HIGHLIGHTS
The table set forth below provides selected per share data and ratios for
both Class A and Class B shares for the periods shown. This information is
supplemented by and should be read in conjunction with financial statements and
accompanying notes appearing in the Fund's Annual Report to Shareholders for the
fiscal year ended October 31, 1995, which are incorporated by reference into the
SAI. The financial statements and notes, as well as the financial information
set forth in the table below, have been audited by Price Waterhouse LLP,
independent accountants, whose report thereon is also included in the annual
report to shareholders. Shareholders can obtain a copy of this annual report by
contacting the Fund or their Shareholder Servicing Agent.
<TABLE>
<CAPTION>
VISTA INTERNATIONAL EQUITY FUND
Class A Class B
----------------------------- -------------------
Year Ended 12/31/92+ Year 11/4/93++
------------------- through Ended through
10/31/95 10/31/94 10/31/93 10/31/95 10/31/94
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $12.31 $11.82 $10.00 $12.23 $11.69
------ ------ ------ ------ ------
Income from Investment Operations:
Net Investment Income (Loss)* 0.039 (0.022) (0.010) (0.026) (0.053)
Net Gains or (Losses) in Securities
(both realized and unrealized) (0.190) 0.566 1.830 (0.180) 0.647
------ ------ ------ ------ ------
Total from Investment Operations (0.151) 0.544 1.820 (0.206) 0.594
------ ------ ------ ------ ------
Less Distributions:
Distribution from Capital Gains 0.137 0.054 0.000 0.137 0.054
------ ------ ------ ------ ------
Net Asset Value, End of Period $12.02 $12.31 $11.82 $11.89 $12.23
====== ====== ====== ====== ======
Total Return (1) (1.19%) 4.61% 22.23% (1.61%) 5.09%
Ratios/Supplemental Data**
Net Assets, end of period (in 000's) $26,287 $37,926 $14,290 $6,759 $7,182
Ratio of Expenses to Average
Net Assets* 2.01% 2.00% 2.13% 2.50% 2.50%
Ratio of Net Investment Income (Loss) to
Average Net Assets*(2) (0.10)% (0.27)% (0.14)% (0.53%) (0.94%)
Ratio of Expenses without waivers
and assumption of expenses to
Average Net Assets* 2.86% 2.46% 2.86% 3.36% 3.36%
Ratio of Net Investment (Loss) Income
without waivers and assumption
of expenses to Average Net Assets* (0.96%) (0.73%) (2.11)% (1.40%) (1.80)%
</TABLE>
- ---------------
+ Commencement of operations.
++ Commencement of offering of shares.
** Includes the Fund's share of Portfolio income and expenses, as appropriate.
* Short periods have been Annualized.
(1) Total return figures do not include the effect of any front-end sales load.
(2) Not to exceed maximum statutory expense ratio.
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<PAGE>
FUND OBJECTIVE
Vista International Equity Fund seeks total return from long-term capital
growth and income. The Fund is not intended to be a complete investment program,
and there is no assurance it will achieve its objective.
INVESTMENT POLICIES
Investment Approach
The Fund seeks to achieve its objective by investing all of its investable
assets in the Portfolio. The Portfolio will invest principally in a broad
portfolio of marketable equity securities of established foreign companies
organized in countries other than the U.S, and foreign subsidiaries of U.S.
companies participating in foreign economies. Under normal market conditions,
the Portfolio will invest at least 65% of its net assets in equity securities,
including common stocks, preferred stocks, securities convertible into common
stocks, and warrants to purchase common stocks.
The Portfolio's advisers seek to identify those countries and industries
where economic and political factors, including currency movements, are likely
to produce above-average growth rates. The Portfolio's advisers attempt to
identify those companies in such countries and industries that are best
positioned and managed to take advantage of these economic and political
factors. The Portfolio will seek to diversify investments broadly among issuers
in various countries and normally to have represented in the Portfolio business
activities of not less than three different countries other than the U.S. The
Portfolio may invest a substantial portion of its assets in one or more of such
countries.
The Portfolio intends to invest in companies based in (or governments
located in) the Far East (Japan, Hong Kong, Singapore and Malaysia), Western
Europe (United Kingdom, Germany, Netherlands, France, Switzerland), Australia,
Canada and such other areas and countries as the Portfolio's advisers may
determine from time to time. However, investments may be made from time to time
in companies in, or governments of, developing countries as well as developed
countries.
The Portfolio's advisers will allocate the Portfolio's investments among
securities denominated in the U.S. dollar and currencies of foreign countries.
The advisers may adjust the Portfolio's exposure to each currency based on their
perception of the most favorable markets and issuers. The percentage of the
Portfolio's assets invested in securities of a particular country or denominated
in a particular currency will vary in accordance with the advisers' assessment
of the relative yield and appreciation potential of such securities and the
current and anticipated relationship of a country's currency to the U.S. dollar.
Fundamental economic strength, earnings growth, quality of management, industry
growth, credit quality and interest rate trends are some of the principal
factors which may be considered by the Portfolio's advisers in determining
whether to increase or decrease the emphasis placed upon a particular type of
security, industry sector, country or currency within the Portfolio's investment
portfolio. Securities purchased by the Portfolio may be denominated in a
currency other than that of the country in which the issuer is domiciled.
Primary emphasis will be placed on equity securities and securities with
equity features. However, the Portfolio may invest in any type of investment
grade debt security including, but not limited to, other convertible securities,
bonds, notes and other debt securities of foreign governmental and private
issuers, and various derivative securities.
The Portfolio will neither invest more than 25% of its net assets in debt
securities denominated in a single currency other than the U.S. dollar, nor
invest more than 25% of its net assets in debt securities issued by a single
foreign government or supranational organization.
-6-
<PAGE>
The Portfolio may invest in securities of companies of various sizes,
including smaller companies whose securities may be more volatile and less
liquid than securities of larger companies. With respect to certain countries in
which capital markets are either less developed or not easily accessed,
investments by the Portfolio may be made through investment in closed-end
investment companies that in turn are authorized to invest in the securities of
such countries.
The Portfolio is classified as a "non-diversified" fund under federal
securities law. The Portfolio's assets may be more concentrated in the
securities of any single issuer or group of issuers than if the Portfolio were
diversified.
The Portfolio may invest any portion of its assets not invested as
described above in high quality money market instruments and repurchase
agreements. For temporary defensive purposes, the Portfolio may invest without
limitation in these instruments. To the extent that the Portfolio departs from
its investment policies during temporary defensive periods, the Fund's
investment objective may not be achieved.
Fund Structure
The Portfolio has an objective identical to that of the Fund. The Fund may
withdraw its investment from the Portfolio at any time if the Trustees determine
that it is in the best interest of the Fund to do so. Upon any such withdrawal,
the Trustees would consider what action might be taken, including investing all
of the Fund's investable assets in another pooled investment entity having
substantially the same objective and policies as the Fund or retaining an
investment adviser to manage the Fund's assets directly.
Other Investment Practices
The Portfolio may also engage in the following investment practices, when
consistent with the Portfolio's overall objective and policies. These practices,
and certain associated risks, are more fully described in the SAI.
Depositary Receipts. The Portfolio may invest its assets in securities of
foreign issuers in the form of American Depositary Receipts, European Depositary
Receipts, Global Depository Receipts or other similar securities representing
securities of foreign issuers (collectively, "Depositary Receipts"). The
Portfolio treats Depositary Receipts as interests in the underlying securities
for purposes of its investment policies. The Portfolio will limit its investment
in Depositary Receipts not sponsored by the issuer of the underlying securities
to no more than 5% of the value of its net assets (at the time of investment).
Money Market Instruments. The Portfolio may invest in cash or
high-quality, short-term moneymarket instruments. Such instruments may include
U.S. Government securities, commercial paper of domestic and foreign issuers nad
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Investment Grade Debt Securities. Investment grade debt securities are
securities rated in the category BBB or higher by Standard & Poor's Corporation
("S&P"), or Baa or higher by Moody's Investors Services, Inc. ("Moody's") or the
equivalent by another national rating organization, or, if unrated, determined
by the advisers to be of comparable quality.
Supranational and ECU Obligations. The Portfolio may invest in securities
issued by supranational organizations, which include organizations such as The
World Bank, the European Community, the European Coal and Steel Community and
the Asian Development Bank. The Portfolio may also invest in securities
denominated in the ECU, which is a "basket" consisting of specified amounts of
the currencies of certain member states of the
-7-
<PAGE>
European Community. These securities are typically issued by European
governments and supranational organizations.
Indexed Investments. The Portfolio may invest in instruments which are
indexed to certain specific foreign currency exchange rates. The terms of such
instruments may provide that their principal amounts or just their coupon
interest rates are adjusted upwards or downwards (but not below zero) at
maturity or on established coupon payment dates to reflect changes in the
exchange rate between two or more currencies while the obligation is
outstanding. Such indexed investments entail the risk of loss of principal
and/or interest payments from currency movements in addition to principal risk,
but offer the potential for realizing gains as a result of changes in foreign
currency exchange rates.
Repurchase Agreements, Securities Loans and Forward Commitments. The
Portfolio may enter into agreements to purchase and resell securities at an
agreed-upon price and time. The Portfolio also has the ability to lend portfolio
securities in an amount equal to not more than 30% of its total assets to
generate additional income. These transactions must be fully collateralized at
all times. The Portfolio may purchase securities for delivery at a future date,
which may increase its overall investment exposure and involves a risk of loss
if the value of the securities declines prior to the settlement date. These
transactions involve some risk to the Portfolio if the other party should
default on its obligation and the Portfolio is delayed or prevented from
recovering the collateral or completing the transaction.
Borrowings and Reverse Repurchase Agreements. The Portfolio may borrow
money from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Portfolio may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Portfolio enters into a reverse repurchase agreement,
it will establish a segregated account in which it will maintain liquid assets
on a daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Portfolio would be required to pay interest on amounts
obtained through reverse repurchase agreements, which are considered borrowings
under federal securities laws.
Stand-By Commitments. The Portfolio may enter into put transactions,
including transactions sometimes referred to as stand-by commitments, with
respect to securities in its portfolio. In these transactions, the Portfolio
would acquire the right to sell a security at an agreed upon price within a
specified period prior to its maturity date. These transactions involve some
risk to the Portfolio if the other party should default on its obligation and
the Portfolio is delayed or prevented from recovering the collateral or
completing the transaction. Acquisition of puts will have the effect of
increasing the cost of the securities subject to the put and thereby reducing
the yields otherwise available from such securities.
Convertible Securities. The Portfolio may invest in convertible
securities, which are securities generally offering fixed interest or dividend
yields which may be converted either at a stated price or stated rate for common
or preferred stock. Although to a lesser extent than with fixed-income
securities generally, the market value of convertible securities tends to
decline as interest rates increase, and increase as interest rates decline.
Because of the conversion feature, the market value of convertible securities
also tends to vary with fluctuations in the market value of the underlying
common or preferred stock.
Other Investment Companies. The Portfolio may invest up to 10% of its
total assets in shares of other investment companies, subject to applicable
regulatory limitations.
Derivatives and Related Instruments. The Portfolio may invest its assets
in derivative and related instruments to hedge various market risks or to
increase the Portfolio's income or gain. Some of these instruments will be
subject to asset segregation requirements to cover the Portfolio's obligations.
The Portfolio may (i) purchase, write and exercise call and put options on
securities and securities indexes (including using options in combination with
securities, other options or derivative instruments); (ii) enter into swaps,
futures contracts and
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options on futures contracts; (iii) employ forward currency and interest rate
contracts; and (iv) purchase and sell structured products, which are instruments
designed to restructure or reflect the characteristics of certain other
investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Portfolio invests may be particularly sensitive to changes in prevailing
economic conditions and market value. The ability of the Portfolio to
successfully utilize these instruments may depend in part upon the ability of
the Portfolio's advisers to forecast these factors correctly. Inaccurate
forecasts could expose the Portfolio to a risk of loss. There can be no
guarantee that there will be a correlation between price movements in a hedging
instrument and in the portfolio assets being hedged. The Portfolio is not
required to use any hedging strategies. Hedging strategies, while reducing risk
of loss, can also reduce the opportunity for gain. Derivatives transactions not
involving hedging may have speculative characteristics, involve leverage and
result in more risk to the Portfolio than hedging strategies using the same
instruments. There can be no assurance that a liquid market will exist at a time
when the Portfolio seeks to close out a derivatives position. Activities of
large traders in the futures and securities markets involving arbitrage,
"program trading," and other investment strategies may cause price distortions
in derivatives markets. In certain instances, particularly those involving
over-the-counter transactions or forward contracts, there is a greater potential
that a counterparty or broker may default. In the event of a default, the
Portfolio may experience a loss. For additional information concerning
derivatives, related instruments and the associated risks, see the SAI.
Portfolio Turnover. The frequency of the Portfolio's portfolio
transactions will vary from year to year. The Portfolio's investment policies
may lead to frequent changes in investments, particularly in periods of rapidly
changing market conditions. High portfolio turnover rates would generally result
in higher transaction costs, including brokerage commissions or dealer mark-ups,
and would make it more difficult for the Portfolio to qualify as a registered
investment company under federal tax law. See "How Distributions are Made; Tax
Information" and "Other Information Concerning the Fund -- Certain Regulatory
Matters."
Limiting Investment Risks
Specific investment restrictions help the Portfolio limit investment risks
for the Fund's shareholders. These restrictions prohibit the Portfolio from: (a)
with respect to 50% of its total assets, holding more than 10% of the voting
securities of any issuer; (b) investing more than 15% of its net assets in
illiquid securities (which include securities restricted as to resale unless
they are determined to be readily marketable in accordance with procedures
established by the Board of Trustees of the Portfolio); or (c) investing more
than 25% of its total assets in any one industry. A complete description of
these and other investment policies is included in the SAI. Except for the
Fund's investment objective, restriction (c) above and investment policies
designated as fundamental in the SAI, the investment policies of the Portfolio
and the Fund are not fundamental. Shareholder approval is not required to change
any non-fundamental investment policy.
Risk Factors
The net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities held by the Portfolio. As the Portfolio
invests primarily in equity securities of companies outside the U.S., an
investment in the Fund's shares involves a higher degree of risk than an
investment in a U.S. equity fund. An investment in the Fund should not be
considered a complete investment program and may not be appropriate for all
investors.
Since foreign securities are normally denominated and traded in foreign
currencies, the values of the Portfolio's foreign investments may be affected
favorably or unfavorably by currency exchange rates and exchange control
regulations. There may be less information publicly available about foreign
companies than U.S. companies, and they are not generally subject to accounting,
auditing and financial reporting standards and practices comparable to those in
the U.S. The securities of foreign companies may be less liquid and more
volatile than the securities of comparable U.S. companies. Foreign settlement
procedures and trade regulations may involve certain risks (such as delay in
payment or delivery of securities or in the recovery of the Portfolio's assets
held abroad) and expenses. It is possible that nationalization or expropriation
of assets, imposition of currency exchange controls, confiscatory taxation,
political or financial instability and diplomatic developments could affect the
value of the Portfolio's investments in certain foreign countries. Foreign laws
may restrict the ability to invest in certain
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countries or issuers and special tax considerations will apply to foreign
securities. Investments in securities of issuers based in developing countries
entails certain additional risks, including greater risks of expropriation,
confiscatory taxation, nationalization, and less social, political and economic
stability.
The small size of markets for securities of issuers based in such
countries and the low or non-existent volume of trading may result in a lack of
liquidity and in price volatility. Certain national policies may restrict the
investment opportunities, including restrictions on investing in issuers or
industries deemed sensitive to relevant national interests. There may be an
absence of developed legal structures governing private or foreign investment
and private property.
Some of the securities in which the Portfolio may invest may be of smaller
companies. The securities of smaller companies, whether foreign or domestic,
often trade less frequently and in more limited volume, and may be subject to
more abrupt or erratic price movements, than securities of larger, more
established companies. Such companies may have limited product lines, markets or
financial resources, or may depend on a limited management group.
Securities rated in the category Baa by Moody's or BBB by S&P lack certain
investment characteristics and may have speculative characteristics.
Because the Portfolio is "non-diversified," the value of the Fund's shares
is more susceptible to developments affecting issuers in which the Portfolio
invests.
For a discussion of certain other risks associated with the Portfolio's
additional investment activities, see "Other Investment Practices" above.
MANAGEMENT
The Portfolio's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the
Portfolio pursuant to an Investment Advisory Agreement and has overall
responsibility for investment decisions of the Portfolio, subject to the
oversight of the Board of Trustees. Chase is a wholly-owned subsidiary of The
Chase Manhattan Corporation, a bank holding company. Chase and its predecessors
have over 100 years of money management experience. For its investment advisory
services to the Portfolio, Chase is entitled to receive an annual fee computed
daily and paid monthly based at an annual rate equal to 1.00% of the
Portfolio's average daily net assets. Chase is located at 270 Park Avenue, New
York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Portfolio pursuant to a Sub-Investment
Advisory Agreement between CAM and Chase. CAM is a wholly-owned operating
subsidiary of Chase. CAM makes investment decisions for the Portfolio on a
day-to-day basis. For these services, CAM is entitled to receive a fee, payable
by Chase from its advisory fee, at an annual rate equal to 0.50% of the
Portfolio's average daily net assets. CAM was recently formed for the purpose of
providing discretionary investment advisory services to institutional clients
and to consolidate Chase's investment management function. The same individuals
who serve as portfolio managers for Chase also serve as portfolio managers for
CAM. CAM is located at 1211 Avenue of the Americas, New York, New York 10036.
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Portfolio Manager. Joe DeSantis, Vice President of Chase, is responsible
for the day-to-day management of the Portfolio, and he has managed the
Portfolio since its inception on December 31, 1992. Mr. DeSantis joined Chase
in 1990 with responsibility for research and compilation of international
equity recommendations, among other things. Mr. DeSantis was formerly a
director at Strategic Research International, Inc., and Institutional Research
Services, Carl Marks & Company; a founding partner and director of Strategic
Research International, Inc.; and a credit analyst at Moody's Investors
Services, Municipal Research Department.
ABOUT YOUR INVESTMENT
Alternative Sales Arrangements
Class A shares. An investor who purchases Class A shares pays a sales
charge at the time of purchase. As a result, Class A shares are not subject to
any sales charges when they are redeemed. Certain purchases of Class A shares
qualify for reduced sales charges. Class A shares have lower combined 12b-1 and
service fees than Class B shares. See "How to Buy, Sell and Exchange Shares" and
"Other Information Concerning the Fund."
Class B shares. Class B shares are sold without an initial sales charge,
but are subject to a contingent deferred sales charge ("CDSC") if redeemed
within a specified period after purchase. Class B shares also have higher
combined 12b-1 and service fees than Class A shares.
Class B shares automatically convert into Class A shares, based on
relative net asset value, at the beginning of the ninth year after purchase. For
more information about the conversion of Class B shares, see the SAI. This
discussion will include information about how shares acquired through
reinvestment of distributions are treated for conversion purposes. Class B
shares provide an investor the benefit of putting all of the investor's dollars
to work from the time the investment is made. Until conversion, Class B shares
will have a higher expense ratio and pay lower dividends than Class A shares
because of the higher combined 12b-1 and service fees. See "How to Buy, Sell and
Exchange Shares" and "Other Information Concerning the Fund."
Which arrangement is best for you? The decision as to which class of
shares provides a more suitable investment for an investor depends on a number
of factors, including the amount and intended length of the investment.
Investors making investments that qualify for reduced sales charges might
consider Class A shares. Investors who prefer not to pay an initial sales charge
might consider Class B shares. In almost all cases, investors planning to
purchase $250,000 or more of the Fund's shares will pay lower aggregate charges
and expenses by purchasing Class A shares.
HOW TO BUY, SELL AND EXCHANGE SHARES
How to Buy Shares
You can open a Fund account with as little as $2,500 ($1,000 for IRAs,
SEP-IRAs and the Systematic Investment Plan) and make additional investments at
any time with as little as $100. You can buy Fund shares three ways--through an
investment representative, through the Fund's distributor by calling the Vista
Service Center, or through the Systematic Investment Plan.
All purchases made by check should be in U.S. dollars and made payable to
the Vista Funds. Third party checks, credit cards and cash will not be accepted.
The Fund reserves the right to reject any purchase order or cease offering
shares for purchase at any time. When purchases are made by check, redemptions
will not be
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allowed until clearance of the purchase check, which may take 15 calendar days
or longer. In addition, the redemption of shares purchased through ACH will not
be allowed until clearance of your payment which may take 7 business days or
longer.
Buying shares through the Fund's distributor. Complete and return the
enclosed application and your check in the amount you wish to invest to the
Vista Service Center.
Buying shares through systematic investing. You can make regular
investments of $100 or more per transaction through automatic periodic deduction
from your bank checking or savings account. Shareholders electing to start this
Systematic Investment Plan when opening an account should complete Section 8 of
the account application. Current shareholders may begin such a plan at any time
by sending a signed letter with signature guarantee and a deposit slip or voided
check to the Vista Service Center. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Shares are sold at the public offering price based on the net asset value
next determined after the Vista Service Center receives your order in proper
form. In most cases, in order to receive that day's public offering price, the
Vista Service Center must receive your order before the close of regular trading
on the New York Stock Exchange. If you buy shares through your investment
representative, the representative must receive your order before the close of
regular trading on the New York Stock Exchange to receive that day's public
offering price. Orders for shares are accepted by the Fund after funds are
converted to federal funds. Orders paid by check and received by 2:00 p.m.,
Eastern Time will generally be available for the purchase of shares the
following business day.
If you are considering redeeming or exchanging shares or transferring
shares to another person shortly after purchase, you should pay for those shares
with a certified check to avoid any delay in redemption, exchange or transfer.
Otherwise the Fund may delay payment until the purchase price of those shares
has been collected or, if you redeem by telephone, until 15 calendar days after
the purchase date. To eliminate the need for safekeeping, the Fund will not
issue certificates for your Class A shares unless you request them. Due to the
conversion feature of Class B shares, certificates for Class B shares will not
be issued and all Class B shares will be held in book entry form.
Class A Shares
The public offering price of Class A shares is the net asset value plus a
sales charge that varies depending on the size of your purchase. The Fund
receives the net asset value. The sales charge is allocated between your
broker-dealer and the Fund's distributor as shown in the following table,
except when the Fund's distributor, in its discretion, allocates the entire
amount to your broker-dealer.
- -------------------------------------------------------------------------------
Sales charge as a
percentage of: Amount of sales charge
Amount of transaction at reallowed to dealers as a
offering price($) Offering Net Amount percentage of offering price
Price Invested
- -------------------------------------------------------------------------------
Under 100,000 4.75 4.99 4.00
- -------------------------------------------------------------------------------
100,000 but under 250,000 3.75 3.90 3.25
- -------------------------------------------------------------------------------
250,000 but under 500,000 2.50 2.56 2.25
- -------------------------------------------------------------------------------
500,000 but under 1,000,000 2.00 2.04 1.75
- -------------------------------------------------------------------------------
There is no initial sales charge on purchases of Class A shares of $1
million or more.
The Fund's distributor pays broker-dealers commissions on net sales of
Class A shares of $1 million or more based on an investor's cumulative
purchases. Such commissions are paid at the rate of 1.00% of the amount under
$2.5 million, 0.75% of the next $7.5 million, 0.50% of the next $40 million and
0.20% thereafter. The Fund's distributor may withhold such payments with respect
to short-term investments.
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Class B Shares
Class B shares are sold without an initial sales charge, although a CDSC
will be imposed if you redeem shares within a specified period after purchase,
as shown in the table below. The following types of shares may be redeemed
without charge at any time: (i) shares acquired by reinvestment of distributions
and (ii) shares otherwise exempt from the CDSC, as described below. For other
shares, the amount of the charge is determined as a percentage of the lesser of
the current market value or the purchase price of shares being redeemed.
Year 1 2 3 4 5 6 7 8+
- --------------------------------------------------------------
CDSC 5% 4% 3% 3% 2% 1% 0% 0%
In determining whether a CDSC is payable on any redemption, the Fund will
first redeem shares not subject to any charge, and then shares held longest
during the CDSC period. When a share that has appreciated in value is redeemed
during the CDSC period, a CDSC is assessed only on its initial purchase price.
For information on how sales charges are calculated if you exchange your shares,
see "How to Exchange Your Shares." The Fund's distributor pays broker-dealers a
commission of 4.00% of the offering price on sales of Class B shares, and the
distributor receives the entire amount of any CDSC you pay.
General
You may be eligible to buy Class A shares at reduced sales charges. Consult
your investment representative or the Vista Service Center for details about
Vista's combined purchase privilege, cumulative quantity discount, statement of
intention, group sales plan, employee benefit plans, and other plans.
Descriptions are also included in the enclosed application and in the SAI. In
addition, sales charges will not apply to shares purchased with redemption
proceeds received within the prior ninety days from non-Vista mutual funds on
which the investor paid a front-end or contingent deferred sales charge.
A participant-directed employee benefit plan participating in a
"multi-fund" program approved by the Board of Trustees may include amounts
invested in the other mutual funds participating in such program for purposes of
determining whether the plan may purchase Class A shares at net asset value.
These investments will also be included for purposes of the discount privileges
and programs described above.
The Fund may sell Class A shares at net asset value without an initial
sales charge to the current and retired Trustees (and their immediate families),
current and retired employees (and their immediate families) of Chase, the
Fund's distributor and transfer agent or any affiliates or subsidiaries thereof,
registered representatives and other employees (and their immediate families) of
broker-dealers having selected dealer agreements with the Fund's distributor,
employees (and their immediate families) of financial institutions having
selected dealer agreements with the Fund's distributor (or otherwise having an
arrangement with a broker-dealer or financial institution with respect to sales
of Vista fund shares) financial institution trust departments investing an
aggregate of $1 million or more in the Vista Family of Funds and clients of
certain administrators of tax-qualified plans when proceeds from repayments of
loans to participants are invested (or reinvested) in the Vista Family of Funds.
No initial sales charge will apply to the purchase of Class A shares of
the Fund by an investor seeking to invest the proceeds of a qualified retirement
plan where a portion of the plan was invested in the Vista Family of
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Funds, any qualified retirement plan with 50 or more participants, or an
individual participant in a tax-qualified plan making a tax-free rollover or
transfer of assets from the plan in which Chase or an affiliate serves as
trustee or custodian of the plan or manages some portion of the plan's assets.
Purchases of Class A shares of the Fund may be made with no initial sales
charge through an investment adviser or financial planner that charges a fee for
its services. Purchases of Class A shares of the Fund may be made with no
initial sales charge (i) by an investment adviser, broker or financial planner,
provided arrangements are preapproved and purchases are placed through an
omnibus account with the Fund or (ii) by clients of such investment adviser or
financial planner who place trades for their own accounts, if such accounts are
linked to a master account of such investment adviser or financial planner on
the books and records of the broker or agent. Such purchases may be made for
retirement and deferred compensation plans and trusts used to fund those plans.
Purchases of Class A shares of the Fund may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary exercising investment discretion, provided that
appropriate notification of such fiduciary relationship is reported at the time
of the investment to the Fund, the Fund's distributor or the Vista Service
Center.
Shareholders of record of any Vista fund as of November 30, 1990 and
certain immediate family members may purchase Class A shares of the Fund with no
initial sales charge for as long as they continue to own Class A shares of any
Vista fund, provided there is no change in account registration. Shareholders of
record of any portfolio of The Hanover Funds, Inc. or The Hanover Investment
Funds, Inc. as of May 3, 1996 and certain related investors may purchase Class A
shares of the Fund with no initial sales charge for as long as they continue to
own shares of any Vista fund following this date, provided there is no change in
account registration.
The Fund may sell Class A shares at net asset value without an initial
sales charge in connection with the acquisition by the Fund of assets of an
investment company or personal holding company. The CDSC will be waived on
redemption of Class B shares arising out of death or disability or in connection
with certain withdrawals from IRA or other retirement plans. Up to 12% of the
value of Class B shares subject to a systematic withdrawal plan may also be
redeemed each year without a CDSC, provided that the Class B account had a
minimum balance of $20,000 at the time the systematic withdrawal plan was
established. The SAI contains additional information about purchasing the Fund's
shares at reduced sales charges.
The Fund reserves the right to change any of these policies on purchases
without an initial sales charge at any time and may reject any such purchase
request.
Shareholders of other Vista funds may be entitled to exchange their shares
for, or reinvest distributions from their funds in, shares of the Fund at net
asset value.
How to Sell Shares
You can sell your shares to the Fund any day the New York Stock Exchange is
open, either directly to the Fund or through your investment representative. The
Fund will only forward redemption payments on shares for which it has collected
payment of the purchase price.
Selling shares directly to the Fund. Send a signed letter of instruction
to the Vista Service Center, along with any certificates that represent shares
you want to sell. The price you will receive is the next net asset value
calculated after the Fund receives your request in proper form, less any
applicable CDSC. In order to receive that day's net asset value, the Vista
Service Center must receive your request before the close of regular trading on
the New York Stock Exchange.
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If you sell shares having a net asset value of $100,000 or more, the
signatures of registered owners or their legal representatives must be
guaranteed by a bank, broker-dealer or certain other financial institutions. See
the SAI for more information about where to obtain a signature guarantee.
If you want your redemption proceeds sent to an address other than your
address as it appears on Vista's records, a signature guarantee is required. The
Fund may require additional documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Vista Service Center for details.
The Fund generally sends you payment for your shares the business day after
your request is received, assuming the Fund has collected payment of the
purchase price of your shares. Under unusual circumstances, the Fund may suspend
redemptions, or postpone payment for more than seven days, as permitted by
federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request, as described above,
or contact your investment representative. The Telephone Redemption Privilege is
not available if you were issued certificates for shares that remain
outstanding. The Telephone Redemption Privilege may be modified or terminated
without notice.
Systematic withdrawal. You can make regular withdrawals of $50 or more
($100 or more for Class B accounts) monthly, quarterly or semiannually. A
minimum account balance of $5,000 is required to establish a systematic
withdrawal plan for Class A accounts. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Selling shares through your investment representative. Your investment
representative must receive your request before the close of regular trading on
the New York Stock Exchange to receive that day's net asset value. Your
investment representative will be responsible for furnishing all necessary
documentation to the Vista Service Center, and may charge you for its services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $500 or if you purchase through the Systematic Investment
Plan and fail to meet the Fund's investment minimum within a twelve month
period. In the event of any such redemption, you will receive at least 60 days
notice prior to the redemption. In the event the Fund redeems Class B shares
pursuant to this provision, no CDSC will be imposed.
How to Exchange Your Shares
You can exchange your shares for shares of the same class of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer all classes of shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully and retained for
future reference. If you exchange shares subject to a CDSC, the transaction will
not be subject to the CDSC. However, when you redeem the shares acquired through
the exchange, the redemption may be subject to the CDSC, depending upon when you
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<PAGE>
originally purchased the shares. The CDSC will be computed using the schedule of
any fund into or from which you have exchanged your shares that would result in
your paying the highest CDSC applicable to your class of shares. In computing
the CDSC, the length of time you have owned your shares will be measured from
the date of original purchase and will not be affected by any exchange.
An exchange of Class B shares into any of the Vista money market funds
other than the Class B shares of the Vista Prime Money Market Fund will be
treated as a redemption -- and therefore subject to the conditions of the CDSC
- -- and a subsequent purchase. Class B shares of any Vista non-money market fund
may be exchanged into the Class B shares of the Vista Prime Money Market Fund in
order to continue the aging of the initial purchase of such shares.
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the amount or
number of exchanges or reject any exchange. In addition, any shareholder who
makes more than ten exchanges of shares involving the Fund in a year or three in
a calendar quarter will be charged a $5.00 administration fee for each such
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult the Vista Service Center before requesting an exchange.
See the SAI to find out more about the exchange privilege.
Reinstatement privilege. Class A shareholders have a one time privilege of
reinstating their investment in the Fund at net asset value next determined
subject to written request within 90 calendar days of the redemption,
accompanied by payment for the shares (not in excess of the redemption). Class B
shareholders who have redeemed their shares and paid a CDSC with such redemption
may purchase Class A shares with no initial sales charge (in an amount not in
excess of their redemption proceeds) if the purchase occurs within 90 days of
the redemption of the Class B shares.
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each business day of the Fund, by
dividing the net assets of the Fund attributable to that class by the total
number of outstanding shares of that class. Values of assets held by the Fund
(i.e., the value of its investment in the Portfolio and its other assets) are
determined on the basis of their market or other fair value, as described in the
SAI.
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HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund distributes any net investment income at least semi-annually and
any net realized capital gains at least annually. Distributions from capital
gains are made after applying any available capital loss carryovers.
Distributions paid by the Fund with respect to Class A shares will generally be
greater than those paid with respect to Class B shares because expenses
attributable to Class B shares will generally be higher.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares without a sales charge; (2) receive
distributions from net investment income in cash or by ACH to a pre-established
bank account while reinvesting capital gains distributions in additional shares
without a sales charge; or (3) receive all distributions in cash or by ACH. You
can change your distribution option by notifying the Vista Service Center in
writing. If you do not select an option when you open your account, all
distributions will be reinvested. All distributions not paid in cash or by ACH
will be reinvested in shares of the class on which the distributions are paid.
You will receive a statement confirming reinvestment of distributions in
additional Fund shares promptly following the quarter in which the reinvestment
occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
Investment income received by the Fund from sources within foreign
countries may be subject to foreign taxes withheld at the source. Since more
than 50% of the value of the total assets of the Fund at the close of the Fund's
taxable year is anticipated to be stock or securities of foreign corporations,
the Fund may elect to "pass through" to its shareholders the amount of foreign
taxes paid by the Fund.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
-17-
<PAGE>
OTHER INFORMATION CONCERNING THE FUND
Distribution Plans
The Fund's distributor is Vista Fund Distributors, Inc. ("VFD"). VFD is a
subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase. The Trust
has adopted Rule 12b-1 distribution plans for Class A and Class B shares which
provide that the Fund will pay distribution fees at annual rates of up to 0.25%
and 0.75% of the average daily net assets attributable to Class A and Class B
shares of the Fund, respectively. Payments under the distribution plans shall be
used to compensate or reimburse the Fund's distributor and broker-dealers for
services provided and expenses incurred in connection with the sale of Class A
and Class B shares, and are not tied to the amount of actual expenses incurred.
Payments may be used to compensate broker-dealers with trail or maintenance
commissions at an annual rate of up to 0.25% of the average daily net asset
value of Class A or Class B shares maintained in the Fund by customers of these
broker-dealers. Trail or maintenance commissions are paid to broker-dealers
beginning the 13th month following the purchase of shares by their customers.
Some activities intended to promote the sale of Class A and Class B shares will
be conducted generally by the Vista Family of Funds, and activities intended to
promote the Fund's Class A or Class B shares may also benefit the Fund's other
shares and other Vista funds.
VFD may provide promotional incentives to broker-dealers that meet
specified sales targets for one or more Vista funds. These incentives may
include gifts of up to $100 per person annually; an occasional meal, ticket to a
sporting event or theater or entertainment for broker-dealers and their guests;
and payment or reimbursement for travel expenses, including lodging and meals,
in connection with attendance at training and educational meetings within and
outside the U.S.
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Class A or Class B shares of the Fund. These
services include assisting with purchase and redemption transactions,
maintaining shareholder accounts and records, furnishing customer statements,
transmitting shareholder reports and communications to customers and other
similar shareholder liaison services. For performing these services, each
shareholder servicing agent receives an annual fee of up to 0.25% of the average
daily net assets of Class A and Class B shares of the Fund held by investors for
whom the shareholder servicing agent maintains a servicing relationship.
Shareholder servicing agents may subcontract with other parties for the
provision of shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator and Sub-Administrator
Chase acts as the administrator for the Fund and the Portfolio and is
entitled to receive from each of the Fund and the Portfolio a fee computed daily
and paid monthly at an annual rate equal to 0.05% of their respective average
daily net assets.
-18-
<PAGE>
VFD provides certain sub-administrative services to the Fund pursuant to
its distribution and sub-administration agreement and is entitled to receive a
fee for these services from the Fund at an annual rate equal to 0.05% of the
Fund's average daily net assets. VFD has agreed to use a portion of this fee to
pay for certain expenses incurred in connection with organizing new series of
the Trust and certain other ongoing expenses of the Trust. VFD is located at
101 Park Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Shareholder servicing and
distribution fees are allocated to specific classes of the Fund. In addition,
the Fund may allocate transfer agency and certain other expenses by class.
Service providers to the Fund may, from time to time, voluntarily waive all or a
portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Shares have no
preemptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of the Fund generally vote
together except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class.
The Fund issues multiple classes of shares. This Prospectus relates to
Class A and Class B shares of the Fund. The Fund may offer other classes of
shares in addition to these classes. The categories of investors that are
eligible to purchase shares and minimum investment requirements may differ for
each class of Fund shares. In addition, other classes of Fund shares may be
subject to differences in sales charge arrangements, ongoing distribution and
service fee levels, and levels of certain other expenses, which would affect the
relative performance of the different classes. Investors may call 1-800-34-VISTA
to obtain additional information about other classes of shares of the Fund that
are offered. Any person entitled to receive compensation for selling or
servicing shares of the Fund may receive different levels of compensation with
respect to one class of shares over another.
-19-
<PAGE>
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Unique Characteristics of Master/Feeder Fund Structure
Unlike other mutual funds which directly acquire and manage their own
portfolio securities, the Fund invests all of its investable assets in the
Portfolio, a separate registered investment company. Therefore, a shareholder's
interest in the Portfolio's securities is indirect. In addition to selling a
beneficial interest to the Fund, the Portfolio may sell beneficial interests to
other mutual funds or institutional investors. Such investors will invest in the
Portfolio on the same terms and conditions and will pay a proportionate share of
the Portfolio's expenses. However, other investors investing in the Portfolio
are not required to sell their shares at the same public offering prices as the
Fund, and may bear different levels of ongoing expenses than the Fund.
Shareholders of the Fund should be aware that these differences may result in
differences in returns experienced in the different funds that invest in the
Portfolio. Such differences in returns are also present in other mutual fund
structures.
Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns. Additionally, the Portfolio
may become less diverse, resulting in increased portfolio risk. However, this
possibility also exists for traditionally structured funds which have large or
institutional investors. Funds with a greater pro rata ownership in the
Portfolio could have effective voting control of the operations of the
Portfolio. Whenever the Trust is requested to vote on matters pertaining to the
Portfolio, the Trust will hold a meeting of shareholders of the Fund and will
cast all of its votes in the same proportion as do the Fund's shareholders.
Shares of the Fund for which no voting instructions have been received will be
voted in the same proportion as those shares for which voting instructions are
received. Certain changes in the Portfolio's objective, policies or restrictions
may require the Trust to withdraw the Fund's interest in the Portfolio. Any
withdrawal could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution from the Portfolio). The Fund could incur
brokerage fees or other transaction costs in converting such securities to cash.
In addition, a distribution in kind may result in a less diversified portfolio
of investments or adversely affect the liquidity of the Fund.
State securities regulations generally do not permit the same individuals
who are disinterested Trustees of the Trust to be Trustees of the Portfolio
absent the adoption of written procedures by a majority of the disinterested
Trustees of the Trust reasonably appropriate to deal with potential conflicts of
interest up to and including creating a separate Board of Trustees. The Trustees
of the Trust, including a majority of the disinterested Trustees, have adopted
procedures they believe are reasonably appropriate to deal with any conflict of
interest up to and including creating a separate Board of Trustees.
-20-
<PAGE>
Investors in the Fund may obtain information about whether an investment
in the Portfolio may be available through other funds by calling the Vista
Service Center at 1-800-34-VISTA.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income per share during a recent 30-day period by the
maximum public offering price per share of such class on the last day of that
period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the maximum public offering price (in the case of Class A shares) or
reflecting the deduction of any applicable contingent deferred sales charge (in
the case of Class B shares). Total return may also be presented for other
periods or without reflecting sales charges. Any quotation of investment
performance not reflecting the maximum initial sales charge or contingent
deferred sales charge would be reduced if such sales charges were used.
-21-
<PAGE>
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other mutual
funds and other investment vehicles. Quotation of investment performance for any
period when a fee waiver or expense limitation was in effect will be greater
than if the waiver or limitation had not been in effect. The Fund's performance
may be compared to other mutual funds, relevant indices and rankings prepared by
independent services. See the SAI.
-22-
<PAGE>
MAKE THE MOST OF YOUR VISTA PRIVILEGES
The following services are available to you as a Vista mutual fund shareholder.
o SYSTEMATIC INVESTMENT PLAN - Invest as much as you wish ($100 or more) in
the first or third week of any month. The amount will be automatically
transferred from your checking or savings account.
o SYSTEMATIC WITHDRAWAL - Make regular withdrawals of $50 or more ($100 or
more for Class B accounts) monthly, quarterly or semiannually. A minimum
account balance of $5,000 is required to establish a systematic withdrawal
plan for Class A accounts.
o SYSTEMATIC EXCHANGE - Transfer assets automatically from one Vista account
to another on a regular, prearranged basis. There is no additional charge
for this service.
o FREE EXCHANGE PRIVILEGE - Exchange money between Vista funds in the same
class of shares without charge. The exchange privilege allows you to
adjust your investments as your objectives change.
Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange and systematic withdrawal or exchange.
o REINSTATEMENT PRIVILEGE - Class A shareholders have a one time privilege
of reinstating their investment in the Fund at net asset value next
determined subject to written request within 90 calendar days of the
redemption, accompanied by payment for the shares (not in excess of the
redemption).
Class B shareholders who have redeemed their shares and paid a CDSC with
such redemption may purchase Class A shares with no initial sales charge
(in an amount not in excess of their redemption proceeds) if the purchase
occurs within 90 days of the redemption of the Class B shares.
For more information about any of these services and privileges, call your
shareholder servicing agent, investment representative or the Vista Service
Center at 1-800-34-VISTA. These privileges are subject to change or termination.
-23-
<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
-24-
<PAGE>
PROSPECTUS
VISTA[SM] SMALL CAP EQUITY FUND
Class A and B Shares
May 6, 1996
Investment Strategy: Capital Growth
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-34-VISTA. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary............................................................
The expenses you might pay on your Fund investment, including examples
Financial Highlights.......................................................
How the Fund has performed
Fund Objective.............................................................
Investment Policies........................................................
The kinds of securities in which the Fund invests,
investment policies and techniques, and risks
Management.................................................................
Chase Manhattan Bank, the Fund's adviser; Chase Asset Management,
the Fund's sub-adviser, and the individuals who manage the Fund
About Your Investment......................................................
Alternative sales arrangements
How to Buy, Sell and Exchange Shares.......................................
How the Fund Values its Shares.............................................
How Distributions are Made; Tax Information................................
How the Fund distributes its earnings, and
tax treatment related to those earnings
Other Information Concerning the Fund......................................
Distribution plans, shareholder servicing agents, administration,
custodian, expenses, organization and regulatory matters
Performance Information....................................................
How performance is determined, stated and/or advertised
Make the Most of Your Vista Privileges.....................................
-2-
<PAGE>
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs and estimated annual expenses from
investing in the Fund based on expenses incurred in the most recent fiscal year.
The examples show the cumulative expenses attributable to a hypothetical $1,000
investment over specified periods.
Class A Class B
Shareholder Transaction Expenses Shares Shares
------- -------
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)................... 4.75% None
Maximum Deferred Sales Charge
(as a percentage of the lower of original
purchase price or redemption proceeds)(*)............. None 5.00%
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee............................... 0.65% 0.65%
12b-1 Fee(**)......................................... 0.25% 0.75%
Shareholder Servicing Fee............................. None 0.25%
Other Expenses........................................ 0.60% 0.60%
----- -----
Total Fund Operating Expense.......................... 1.50%(***) 2.25%
===== =====
Examples
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares(+)................ $62 $93 $125 $218
Class B Shares:
Assuming complete
redemption at the
end of the
period(++)(+++)................ $74 $103 $143 $240
Assuming no
redemptions (+++).............. $23 $70 $120 $240
- -----------------------
* The maximum deferred sales charge on Class B shares applies to redemptions
during the first year after purchase; the charge generally declines by 1%
annually thereafter (except in the fourth year), reaching zero after six
years. See "How to Buy, Sell and Exchange Shares."
-3-
<PAGE>
** Long-term shareholders in mutual funds with 12b-1 fees, such as Class A and
Class B shareholders of the Fund, may pay more than the economic equivalent
of the maximum front-end sales charge permitted by rules of the National
Association of Securities Dealers, Inc.
*** Chase has agreed voluntarily to waive fees payable to it and/or reimburse
expenses for a period of at least one year to the extent necessary to
prevent Total Fund Operating Expenses of Class A shares of the Fund for such
period from exceeding the amount indicated in the table.
+ Assumes deduction at the time of purchase of the maximum sales charge.
++ Assumes deduction at the time of redemption of the maximum applicable
deferred sales charge.
+++ Ten-year figures assume conversion of Class B shares to Class A shares at
the beginning of the ninth year after purchase. See "How to Buy, Sell and
Exchange Shares."
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
-4-
<PAGE>
FINANCIAL HIGHLIGHTS
The table set forth below provides selected per share data and ratios for
both Class A and Class B shares. The information has been audited by Price
Waterhouse LLP, the Fund's independent accountants, whose report on the
financial statements which includes this information and the financial
statements are incorporated by reference into the SAI. The Fund's Annual Report
for the fiscal year ended October 31, 1995 includes these financial statements
and is available without charge upon request.
<TABLE>
<CAPTION>
VISTA SMALL CAP EQUITY FUND
Class A Class B
-------- ---------
12/20/94* 3/28/95**
through through
10/31/95 10/31/95+
-------- ---------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
- --------------------------------
Net Asset Value, Beginning of Period .............................. $ 10.00 $ 11.39
------- -------
Income from Investment Operations:
Net Investment Income (Loss)................................. 0.060 (0.018)
Net Gains or (Losses) in Securities
(both realized and unrealized)............................ 5.056 3.669
------- -------
Total from Investment Operations ............................ 5.116 3.651
------- -------
Less Distributions:
Dividends from Net Investment Income ........................ 0.042 0.027
Distributions from Capital Gains ............................ 0.004 0.004
------- -------
Total Distributions .......................................... 0.046 0.031
------- -------
Net Asset Value, End of Period .................................... $ 15.07 $ 15.01
======= =======
Total Return(1) ................................................... 51.25% 32.09%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ........................ $43,739 $21,624
Ratio of Expenses to Average Net Assets # ...................... 1.51% 2.24%
Ratio of Net Investment Income to Average Net Assets # ......... 0.52% (0.25%)
Ratio of Expenses without waivers and assumption of expenses to
Average Net Assets # ......................................... 2.67% 3.23%
Ratio of Net Investment Income without waivers and assumption
of expenses to Average Net Assets # .......................... (0.64%) (1.24%)
Portfolio Turnover Rate ........................................... 75% 75%
</TABLE>
# Short periods have been annualized.
* Commencement of operations.
** Commencement of offering shares.
(1) Total rates of return are calculated before taking into account any sales
load for Class A shares or any contingent deferred sales charge for Class B
shares.
+ Calculated based upon weighted average shares outstanding during the period.
-5-
<PAGE>
FUND OBJECTIVE
Vista Small Cap Equity Fund seeks long-term capital growth. The Fund is
not intended to be a complete investment program, and there is no assurance it
will achieve its objective.
INVESTMENT POLICIES
Investment Approach
Under normal market conditions, the Fund will invest at least 80% of its
total assets in equity securities and at least 65% of its total assets in equity
securities of smaller companies (i.e., those with market capitalizations of $750
million or less at the time of purchase). The Fund's advisers intend to utilize
both quantitative and fundamental research to identify undervalued stocks with a
catalyst for positive change. Current income is an incidental consideration to
the Fund's objective. You should be aware that an investment in smaller
companies may be more volatile than investments in companies with greater
capitalization, as described under "Risk Factors" below.
The Fund is classified as a "non-diversified" fund under federal
securities law. The Fund's assets may be more concentrated in the securities of
any single issuer or group of issuers than if the Fund were diversified.
The Fund may invest any portion of its assets not invested in equity
securities in high quality money market instruments and repurchase agreements.
For temporary defensive purposes, the Fund may invest without limitation in
these instruments. To the extent that the Fund departs from its investment
policies during temporary defensive periods, its investment objective may not be
achieved.
In lieu of investing directly, the Fund is authorized to seek to achieve
its objective by investing all of its investable assets in an investment company
having substantially the same investment objective and policies as the Fund.
Other Investment Practices
The Fund may also engage in the following investment practices, when
consistent with the Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI.
Foreign Securities. The Fund may invest up to 20% of its total assets in
foreign securities, including Depositary Receipts. Since foreign securities are
normally denominated and traded in foreign currencies, the values of the Fund's
foreign investments may be affected favorably or unfavorably by currency
exchange rates and exchange control regulations. There may be less information
publicly available about foreign companies than U.S. companies, and they are not
generally subject to accounting, auditing and financial reporting standards and
practices comparable to those in the U.S. The securities of foreign companies
may be less liquid and more volatile than the securities of comparable U.S.
companies. Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in payment or delivery of securities or in the
recovery of the Fund's assets held abroad) and expenses. It is possible that
nationalization or expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial instability and
diplomatic developments could affect the value of the Fund's investments in
certain foreign countries. Foreign laws may restrict the ability to invest in
certain issuers and special tax considerations will apply to foreign securities.
The risks can increase if the Fund invests in securities of issuers in emerging
markets.
The Fund may invest its assets in securities of foreign issuers in the
form of American Depositary Receipts, European Depositary Receipts or other
similar securities representing securities of foreign issuers (collectively,
"Depositary Receipts"). The Fund treats Depositary Receipts, Global Depositary
Receipts as interests in the underlying securities for purposes of its
investment policies. The Fund will limit its investment in Depositary Receipts
not sponsored by the issuer of the underlying securities to no more than 5% of
the value of its net assets (at the time of investment).
-6-
<PAGE>
Money Market Instruments. The Fund may invest in cash or high-quality,
short-term money market instruments. Such instruments may include U.S.
Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Repurchase Agreements, Securities Loans and Forward Commitments. The Fund
may enter into agreements to purchase and resell securities at an agreed-upon
price and time. The Fund also has the ability to lend portfolio securities in an
amount equal to not more than 30% of its total assets to generate additional
income. These transactions must be fully collateralized at all times. The Fund
may purchase securities for delivery at a future date, which may increase its
overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date. These transactions involve
some risk to the Fund if the other party should default on its obligation and
the Fund is delayed or prevented from recovering the collateral or completing
the transaction.
Borrowings and Reverse Repurchase Agreements. The Fund may borrow money
from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Fund may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Fund enters into a reverse repurchase agreement, it
will establish a segregated account in which it will maintain liquid assets on a
daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Fund would be required to pay interest on amounts
obtained through reverse repurchase agreements, which are considered borrowings
under federal securities laws.
Stand-By Commitments. The Fund may enter into put transactions, including
transactions sometimes referred to as stand-by commitments, with respect to
money market instruments in its portfolio. In these transactions, the Fund would
acquire the right to sell a security at an agreed upon price within a specified
period prior to its maturity date. These transactions involve some risk to the
Fund if the other party should default on its obligation and the Fund is delayed
or prevented from recovering the collateral or completing the transaction.
Acquisition of puts will have the effect of increasing the cost of the
securities subject to the put and thereby reducing the yields otherwise
available from such securities.
Convertible Securities. The Fund may invest up to 20% of its net assets in
convertible securities, which are securities generally offering fixed interest
or dividend yields which may be converted either at a stated price or stated
rate for common or preferred stock. Although to a lesser extent than with
fixed-income securities generally, the market value of convertible securities
tends to decline as interest rates increase, and increase as interest rates
decline. Because of the conversion feature, the market value of convertible
securities also tends to vary with fluctuations in the market value of the
underlying common or preferred stock.
Other Investment Companies. The Fund may invest up to 10% of its total
assets in shares of other investment companies, subject to applicable regulatory
limitations.
STRIPS. The Fund may invest up to 20% of its total assets in separately
traded principal and interest components of securities backed by the full faith
and credit of the U.S. Government, including instruments known as "STRIPS". The
value of these instruments tends to fluctuate more in response to changes in
interest rates than the value of ordinary interest-paying debt securities with
similar maturities. The risk is greater when the period to maturity is longer.
Derivatives and Related Instruments. The Fund may invest its assets in
derivative and related instruments to hedge various market risks or to increase
the Fund's income or gain. Some of these instruments will be subject to asset
segregation requirements to cover the Fund's obligations. The Fund may (i)
purchase, write and exercise call and put options on securities and securities
indexes (including using options in combination with securities, other options
or derivative instruments); (ii) enter into swaps, futures contracts and options
on futures
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contracts; (iii) employ forward currency contracts; and (iv) purchase and sell
structured products, which are instruments designed to restructure or reflect
the characteristics of certain other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Fund invests may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of the Fund to successfully utilize
these instruments may depend in part upon the ability of the Fund's advisers to
forecast these factors correctly. Inaccurate forecasts could expose the Fund to
a risk of loss. There can be no guarantee that there will be a correlation
between price movements in a hedging instrument and in the portfolio assets
being hedged. The Fund is not required to use any hedging strategies. Hedging
strategies, while reducing risk of loss, can also reduce the opportunity for
gain. Derivatives transactions not involving hedging may have speculative
characteristics, involve leverage and result in more risk to the Fund than
hedging strategies using the same instruments. There can be no assurance that a
liquid market will exist at a time when the Fund seeks to close out a
derivatives position. Activities of large traders in the futures and securities
markets involving arbitrage, "program trading," and other investment strategies
may cause price distortions in derivatives markets. In certain instances,
particularly those involving over-the-counter transactions or forward contracts,
there is a greater potential that a counterparty or broker may default. In the
event of a default, the Fund may experience a loss. For additional information,
concerning derivatives, related instruments and the associated risks, see the
SAI.
Portfolio Turnover. The frequency of the Portfolio's portfolio transactions
will vary from year to year. The Portfolio's investment policies may lead to
frequent changes in investments, particularly in periods of rapidly changing
market conditions. High portfolio turnover rates would generally result in
higher transaction costs, including brokerage commissions or dealer mark-ups,
and would make it more difficult for the Fund to qualify as a registered
investment company under federal tax law. See "How Distributions are Made; Tax
Information" and "Other Information Concerning the Fund -- Certain Regulatory
Matters."
Limiting Investment Risks
Specific investment restrictions help the Fund limit investment risks for
its shareholders. These restrictions prohibit the Fund from: (a) with respect to
50% of its total assets, holding more than 10% of the voting securities of any
issuer; (b) investing more than 15% of its net assets in illiquid securities
(which include securities restricted as to resale unless they are determined to
be readily marketable in accordance with procedures established by the Board of
Trustees); or (c) investing more than 25% of its total assets in any one
industry. A complete description of these and other investment policies is
included in the SAI. Except for the Fund's investment objective, restriction (c)
and investment policies designated as fundamental in the SAI, the Fund's
investment policies are not fundamental. The Trustees may change any
non-fundamental policy without shareholder approval.
Risk Factors
The net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities in the Fund's portfolio. The Fund is
aggressively managed and, therefore, the value of its shares is subject to
greater fluctuation and an investment in its shares involves a higher degree of
risk than an investment in a conservative equity fund or a growth fund investing
entirely in proven growth equities. An investment in the Fund should not be
considered a complete investment program and may not be appropriate for all
investors.
The securities of smaller companies often trade less frequently and in
more limited volume, and may be subject to more abrupt or erratic price
movements, than securities of larger, more established companies. Such companies
may have limited product lines, markets or financial resources, or may depend on
a limited management group. Because the Fund is "non-diversified," the value of
the its shares more susceptible to developments affecting issuers in which the
Fund invests.
For a discussion of certain other risks associated with the Fund's
additional investment activities, see "Other Investment Practices" above.
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MANAGEMENT
The Fund's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the Fund
pursuant to an Investment Advisory Agreement and has overall responsibility for
investment decisions of the Fund, subject to the oversight of the Board of
Trustees. Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation,
a bank holding company. Chase and its predecessors have over 100 years of money
management experience. For its investment advisory services to the Fund, Chase
is entitled to receive an annual fee computed daily and paid monthly based at an
annual rate equal to 0.65% of the Fund's average daily net assets. Chase is
located at 270 Park Avenue, New York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Fund pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly-owned operating subsidiary of
Chase. CAM makes investment decisions for the Fund on a day-to-day basis. For
these services, CAM is entitled to receive a fee, payable by Chase from its
advisory fee, at an annual rate equal to 0.30% of the Fund's average daily net
assets. CAM was recently formed for the purpose of providing discretionary
investment advisory services to institutional clients and to consolidate Chase's
investment management function. The same individuals who serve as portfolio
managers for Chase also serve as portfolio managers for CAM. CAM is located at
1211 Avenue of the Americas, New York, New York 10036.
Portfolio Managers. Dave Klassen, Director of Domestic Equity Management
at Chase, and Jill Greenwald, Vice President of Chase, have been responsible for
the day-to-day management of the Fund's portfolio since its inception. Mr.
Klassen joined Chase in March 1992 and, in addition to co-managing the Fund, is
responsible for co-managing the Vista Growth and Income Fund and the Vista
Capital Growth Fund. Prior to joining Chase, Mr. Klassen was a vice president
and portfolio manager at Dean Witter Reynolds, responsible for managing several
mutual funds and other accounts. Ms. Greenwald joined Chase in 1993,
specializing in small cap issues. Prior to joining Chase, Ms. Greenwald was a
Director for Prudential Equity Investors and a Senior Analyst for Fred Alger
Management, Inc.
ABOUT YOUR INVESTMENT
Alternative Sales Arrangements
Class A shares. An investor who purchases Class A shares pays a sales
charge at the time of purchase. As a result, Class A shares are not subject to
any sales charges when they are redeemed. Certain purchases of Class A shares
qualify for reduced sales charges. Class A shares have lower combined 12b-1 and
service fees than Class B shares. See "How to Buy, Sell and Exchange Shares" and
"Other Information Concerning the Fund."
Class B shares. Class B shares are sold without an initial sales charge,
but are subject to a contingent deferred sales charge ("CDSC") if redeemed
within a specified period after purchase. Class B shares also have higher
combined 12b-1 and service fees than Class A shares.
Class B shares automatically convert into Class A shares, based on
relative net asset value, at the beginning of the ninth year after purchase. For
more information about the conversion of Class B shares, see the SAI. This
discussion will include information about how shares acquired through
reinvestment of distributions are treated for conversion purposes. Class B
shares provide an investor the benefit of putting all of the investor's dollars
to work from the time the investment is made. Until conversion, Class B shares
will have a higher expense ratio and pay lower dividends than Class A shares
because of the higher combined 12b-1 and service fees. See "How to Buy, Sell and
Exchange Shares" and "Other Information Concerning the Fund."
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<PAGE>
Which arrangement is best for you? The decision as to which class of
shares provides a more suitable investment for an investor depends on a number
of factors, including the amount and intended length of the investment.
Investors making investments that qualify for reduced sales charges might
consider Class A shares. Investors who prefer not to pay an initial sales charge
might consider Class B shares. In almost all cases, investors planning to
purchase $250,000 or more of the Fund's shares will pay lower aggregate charges
and expenses by purchasing Class A shares.
HOW TO BUY, SELL AND EXCHANGE SHARES
How to Buy Shares
You can open a Fund account with as little as $2,500 ($1,000 for IRAs,
SEP-IRAs and the Systematic Investment Plan) and make additional investments at
any time with as little as $100. You can buy Fund shares three ways--through an
investment representative, through the Fund's distributor by calling the Vista
Service Center, or through the Systematic Investment Plan.
All purchases made by check should be in U.S. dollars and made payable to
the Vista Funds. Third party checks, credit cards and cash will not be accepted.
The Fund reserves the right to reject any purchase order or cease offering
shares for purchase at any time. When purchases are made by check, redemptions
will not be allowed until clearance of the purchase check, which may take 15
calendar days or longer. In addition, the redemption of shares purchased through
ACH will not be allowed until clearance of your payment which may take 7
business days or longer.
Buying shares through the Fund's distributor. Complete and return the
enclosed application and your check in the amount you wish to invest to the
Vista Service Center.
Buying shares through systematic investing. You can make regular
investments of $100 or more per transaction through automatic periodic deduction
from your bank checking or savings account. Shareholders electing to start this
Systematic Investment Plan when opening an account should complete Section 8 of
the account application. Current shareholders may begin such a plan at any time
by sending a signed letter with signature guarantee and a deposit slip or voided
check to the Vista Service Center. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Shares are sold at the public offering price based on the net asset value
next determined after the Vista Service Center receives your order in proper
form. In most cases, in order to receive that day's public offering price, the
Vista Service Center must receive your order before the close of regular trading
on the New York Stock Exchange. If you buy shares through your investment
representative, the representative must receive your order before the close of
regular trading on the New York Stock Exchange to receive that day's public
offering price. Orders for shares are accepted by the Fund after funds are
converted to federal funds. Orders paid by check and received by 2:00 p.m.,
Eastern Time will generally be available for the purchase of shares the
following business day.
If you are considering redeeming or exchanging shares or transferring
shares to another person shortly after purchase, you should pay for those shares
with a certified check to avoid any delay in redemption, exchange or transfer.
Otherwise the Fund may delay payment until the purchase price of those shares
has been collected or, if you redeem by telephone, until 15 calendar days after
the purchase date. To eliminate the need for safekeeping, the Fund will not
issue certificates for your Class A shares unless you request them. Due to the
conversion feature of Class B shares, certificates for Class B shares will not
be issued and all Class B shares will be held in book entry form.
Class A Shares
The public offering price of Class A shares is the net asset value plus a
sales charge that varies depending on the size of your purchase. The Fund
receives the net asset value. The sales charge is allocated between your
broker-dealer and the Fund's distributor as shown in the following table,
except when the Fund's distributor, in its discretion, allocates the entire
amount to your broker-dealer.
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- -------------------------------------------------------------------------------
Sales charge as a
percentage of: Amount of sales charge
Amount of transaction at Offering New amount reallowed to dealers as a
offering price($) price invested percentage of offering price
- -------------------------------------------------------------------------------
Under 100,000 4.75 4.99 4.00
- -------------------------------------------------------------------------------
100,000 but under 250,000 3.75 3.90 3.25
- -------------------------------------------------------------------------------
250,000 but under 500,000 2.50 2.56 2.25
- -------------------------------------------------------------------------------
500,000 but under 1,000,000 2.00 2.04 1.75
- -------------------------------------------------------------------------------
There is no initial sales charge on purchases of Class A shares of $1
million or more.
The Fund's distributor pays broker-dealers commissions on net sales of
Class A shares of $1 million or more based on an investor's cumulative
purchases. Such commissions are paid at the rate of 1.00% of the amount under
$2.5 million, 0.75% of the next $7.5 million, 0.50% of the next $40 million and
0.20% thereafter. The Fund's distributor may withhold such payments with respect
to short-term investments.
Class B Shares
Class B shares are sold without an initial sales charge, although a CDSC
will be imposed if you redeem shares within a specified period after purchase,
as shown in the table below. The following types of shares may be redeemed
without charge at any time: (i) shares acquired by reinvestment of distributions
and (ii) shares otherwise exempt from the CDSC, as described below. For other
shares, the amount of the charge is determined as a percentage of the lesser of
the current market value or the purchase price of shares being redeemed.
Year 1 2 3 4 5 6 7 8+
--------------------------------------------------------
CDSC 5% 4% 3% 3% 2% 1% 0% 0%
In determining whether a CDSC is payable on any redemption, the Fund will
first redeem shares not subject to any charge, and then shares held longest
during the CDSC period. When a share that has appreciated in value is redeemed
during the CDSC period, a CDSC is assessed only on its initial purchase price.
For information on how sales charges are calculated if you exchange your shares,
see "How to Exchange Your Shares." The Fund's distributor pays broker-dealers a
commission of 4.00% of the offering price on sales of Class B shares, and the
distributor receives the entire amount of any CDSC you pay.
General
You may be eligible to buy Class A shares at reduced sales charges. Consult
your investment representative or the Vista Service Center for details about
Vista's combined purchase privilege, cumulative quantity discount, statement of
intention, group sales plan, employee benefit plans, and other plans.
Descriptions are also included in the enclosed application and in the SAI. In
addition, sales charges will not apply to shares purchased with redemption
proceeds received within the prior ninety days from non-Vista mutual funds on
which the investor paid a front-end or contingent deferred sales charge.
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<PAGE>
A participant-directed employee benefit plan participating in a
"multi-fund" program approved by the Board of Trustees may include amounts
invested in the other mutual funds participating in such program for purposes of
determining whether the plan may purchase Class A shares at net asset value.
These investments will also be included for purposes of the discount privileges
and programs described above.
The Fund may sell Class A shares at net asset value without an initial
sales charge to the current and retired Trustees (and their immediate families),
current and retired employees (and their immediate families) of Chase, the
Fund's distributor and transfer agent or any affiliates or subsidiaries thereof,
registered representatives and other employees (and their immediate families) of
broker-dealers having selected dealer agreements with the Fund's distributor,
employees (and their immediate families) of financial institutions having
selected dealer agreements with the Fund's distributor (or otherwise having an
arrangement with a broker-dealer or financial institution with respect to sales
of Vista fund shares) financial institution trust departments investing an
aggregate of $1 million or more in the Vista Family of Funds and clients of
certain administrators of tax-qualified plans when proceeds from repayments of
loans to participants are invested (or reinvested) in the Vista Family of Funds.
No initial sales charge will apply to the purchase of Class A shares of
the Fund by an investor seeking to invest the proceeds of a qualified retirement
plan where a portion of the plan was invested in the Vista Family of Funds, any
qualified retirement plan with 50 or more participants, or an individual
participant in a tax-qualified plan making a tax-free rollover or transfer of
assets from the plan in which Chase or an affiliate serves as trustee or
custodian of the plan or manages some portion of the plan's assets.
Purchases of Class A shares of the Fund may be made with no initial sales
charge through an investment adviser or financial planner that charges a fee for
its services. Purchases of Class A shares of the Fund may be made with no
initial sales charge (i) by an investment adviser, broker or financial planner,
provided arrangements are preapproved and purchases are placed through an
omnibus account with the Fund or (ii) by clients of such investment adviser or
financial planner who place trades for their own accounts, if such accounts are
linked to a master account of such investment adviser or financial planner on
the books and records of the broker or agent. Such purchases may be made for
retirement and deferred compensation plans and trusts used to fund those plans.
Purchases of Class A shares of the Fund may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary exercising investment discretion, provided that
appropriate notification of such fiduciary relationship is reported at the time
of the investment to the Fund, the Fund's distributor or the Vista Service
Center.
Shareholders of record of any Vista fund as of November 30, 1990 and
certain immediate family members may purchase Class A shares of the Fund with no
initial sales charge for as long as they continue to own Class A shares of any
Vista fund, provided there is no change in account registration. Shareholders of
record of any portfolio of The Hanover Funds, Inc. or The Hanover Investment
Funds, Inc. as of May 3, 1996 and certain related investors may purchase Class A
shares of the Fund with no initial sales charge for as long as they continue to
own shares of any Vista fund following this date, provided there is no change in
account registration.
The Fund may sell Class A shares at net asset value without an initial
sales charge in connection with the acquisition by the Fund of assets of an
investment company or personal holding company. The CDSC will be waived on
redemption of Class B shares arising out of death or disability or in connection
with certain withdrawals from IRA or other retirement plans. Up to 12% of the
value of Class B shares subject to a systematic withdrawal plan may also be
redeemed each year without a CDSC, provided that the Class B account had a
minimum balance of $20,000 at the time the systematic withdrawal plan was
established. The SAI contains additional information about purchasing the Fund's
shares at reduced sales charges.
The Fund reserves the right to change any of these policies on purchases
without an initial sales charge at any time and may reject any such purchase
request.
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<PAGE>
Shareholders of other Vista funds may be entitled to exchange their shares
for, or reinvest distributions from their funds in, shares of the Fund at net
asset value.
How to Sell Shares
You can sell your shares to the Fund any day the New York Stock Exchange is
open, either directly to the Fund or through your investment representative. The
Fund will only forward redemption payments on shares for which it has collected
payment of the purchase price.
Selling shares directly to the Fund. Send a signed letter of instruction
to the Vista Service Center, along with any certificates that represent shares
you want to sell. The price you will receive is the next net asset value
calculated after the Fund receives your request in proper form, less any
applicable CDSC. In order to receive that day's net asset value, the Vista
Service Center must receive your request before the close of regular trading on
the New York Stock Exchange.
If you sell shares having a net asset value of $100,000 or more, the
signatures of registered owners or their legal representatives must be
guaranteed by a bank, broker-dealer or certain other financial institutions. See
the SAI for more information about where to obtain a signature guarantee.
If you want your redemption proceeds sent to an address other than your
address as it appears on Vista's records, a signature guarantee is required. The
Fund may require additional documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Vista Service Center for details.
The Fund generally sends you payment for your shares the business day after
your request is received, assuming the Fund has collected payment of the
purchase price of your shares. Under unusual circumstances, the Fund may suspend
redemptions, or postpone payment for more than seven days, as permitted by
federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request, as described above,
or contact your investment representative. The Telephone Redemption Privilege is
not available if you were issued certificates for shares that remain
outstanding. The Telephone Redemption Privilege may be modified or terminated
without notice.
Systematic withdrawal. You can make regular withdrawals of $50 or more
($100 or more for Class B accounts) monthly, quarterly or semiannually. A
minimum account balance of $5,000 is required to establish a systematic
withdrawal plan for Class A accounts. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Selling shares through your investment representative. Your investment
representative must receive your request before the close of regular trading on
the New York Stock Exchange to receive that day's net asset
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<PAGE>
value. Your investment representative will be responsible for furnishing all
necessary documentation to the Vista Service Center, and may charge you for its
services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $500 or if you purchase through the Systematic Investment
Plan and fail to meet the Fund's investment minimum within a twelve month
period. In the event of any such redemption, you will receive at least 60 days
notice prior to the redemption. In the event the Fund redeems Class B shares
pursuant to this provision, no CDSC will be imposed.
How to Exchange Your Shares
You can exchange your shares for shares of the same class of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer all classes of shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully and retained for
future reference. If you exchange shares subject to a CDSC, the transaction will
not be subject to the CDSC. However, when you redeem the shares acquired through
the exchange, the redemption may be subject to the CDSC, depending upon when you
originally purchased the shares. The CDSC will be computed using the schedule of
any fund into or from which you have exchanged your shares that would result in
your paying the highest CDSC applicable to your class of shares. In computing
the CDSC, the length of time you have owned your shares will be measured from
the date of original purchase and will not be affected by any exchange.
An exchange of Class B shares into any of the Vista money market funds
other than the Class B shares of the Vista Prime Money Market Fund will be
treated as a redemption -- and therefore subject to the conditions of the CDSC
- -- and a subsequent purchase. Class B shares of any Vista non-money market fund
may be exchanged into the Class B shares of the Vista Prime Money Market Fund in
order to continue the aging of the initial purchase of such shares.
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the amount or
number of exchanges or reject any exchange. In addition, any shareholder who
makes more than ten exchanges of shares involving the Fund in a year or three in
a calendar quarter will be charged a $5.00 administration fee for each such
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult the Vista Service Center before requesting an exchange.
See the SAI to find out more about the exchange privilege.
Reinstatement privilege. Class A shareholders have a one time privilege of
reinstating their investment in the Fund at net asset value next determined
subject to written request within 90 calendar days of the redemption,
accompanied by payment for the shares (not in excess of the redemption). Class B
shareholders who have redeemed their shares and paid a CDSC with such redemption
may purchase Class A shares with no initial sales charge (in
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<PAGE>
an amount not in excess of their redemption proceeds) if the purchase occurs
within 90 days of the redemption of the Class B shares.
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each business day of the Fund, by
dividing the net assets of the Fund attributable to that class by the total
number of outstanding shares of that class. Values of assets held by the Fund
are determined on the basis of their market or other fair value, as described in
the SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund distributes any net investment income at least semi-annually and
any net realized capital gains at least annually. Distributions from capital
gains are made after applying any available capital loss carryovers.
Distributions paid by the Fund with respect to Class A shares will generally be
greater than those paid with respect to Class B shares because expenses
attributable to Class B shares will generally be higher.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares without a sales charge; (2) receive
distributions from net investment income in cash or by ACH to a pre-established
bank account while reinvesting capital gains distributions in additional shares
without a sales charge; or (3) receive all distributions in cash or by ACH. You
can change your distribution option by notifying the Vista Service Center in
writing. If you do not select an option when you open your account, all
distributions will be reinvested. All distributions not paid in cash or by ACH
will be reinvested in shares of the class on which the distributions are paid.
You will receive a statement confirming reinvestment of distributions in
additional Fund shares promptly following the quarter in which the reinvestment
occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
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<PAGE>
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Distribution Plans
The Fund's distributor is Vista Fund Distributors, Inc. ("VFD"). VFD is a
subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase. The Trust
has adopted Rule 12b-1 distribution plans for Class A and Class B shares which
provide that the Fund will pay distribution fees at annual rates of up to 0.25%
and 0.75% of the average daily net assets attributable to Class A and Class B
shares of the Fund, respectively. Payments under the distribution plans shall be
used to compensate or reimburse the Fund's distributor and broker-dealers for
services provided and expenses incurred in connection with the sale of Class A
and Class B shares, and are not tied to the amount of actual expenses incurred.
Payments may be used to compensate broker-dealers with trail or maintenance
commissions at an annual rate of up to 0.25% of the average daily net asset
value of Class A or Class B shares maintained in the Fund by customers of these
broker-dealers. Trail or maintenance commissions are paid to broker-dealers
beginning the 13th month following the purchase of shares by their customers.
Some activities intended to promote the sale of Class A and Class B shares will
be conducted generally by the Vista Family of Funds, and activities intended to
promote the Fund's Class A or Class B shares may also benefit the Fund's other
shares and other Vista funds.
VFD may provide promotional incentives to broker-dealers that meet
specified sales targets for one or more Vista funds. These incentives may
include gifts of up to $100 per person annually; an occasional meal, ticket to a
sporting event or theater or entertainment for broker-dealers and their guests;
and payment or reimbursement for travel expenses, including lodging and meals,
in connection with attendance at training and educational meetings within and
outside the U.S.
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Class B shares of the Fund. These services
include assisting with purchase and redemption transactions, maintaining
shareholder accounts and records, furnishing customer statements, transmitting
shareholder reports and communications to customers and other similar
shareholder liaison services. For performing these services, each shareholder
servicing agent receives an annual fee of up to 0.25% of the average daily net
assets of Class B shares of the Fund held by investors for whom the shareholder
servicing agent maintains a servicing relationship. Shareholder servicing agents
may subcontract with other parties for the provision of shareholder support
services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
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<PAGE>
Administrator and Sub-Administrator
Chase acts as the Fund's administrator and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets.
VFD provides certain sub-administrative services to the Fund pursuant to
a distribution and sub-administration agreement and is entitled to receive a
fee for these services from the Fund at an annual rate equal to 0.05% of the
Fund's average daily net assets. VFD has agreed to use a portion of this fee to
pay for certain expenses incurred in connection with organizing new series of
the Trust and certain other ongoing expenses of the Trust. VFD is located at
101 Park Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Shareholder servicing and
distribution fees are allocated to specific classes of the Fund. In addition,
the Fund may allocate transfer agency and certain other expenses by class.
Service providers to the Fund may, from time to time, voluntarily waive all or a
portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Shares have no
preemptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of the Fund generally vote
together except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class.
The Fund issues multiple classes of shares. This Prospectus relates only
to Class A and Class B shares of the Fund. The Fund offers other classes of
shares in addition to these classes. The categories of investors that are
eligible to purchase shares and minimum investment requirements may differ for
each class of Fund shares. In addition, other classes of Fund shares may be
subject to differences in sales charge arrangements, ongoing distribution and
service fee levels, and levels of certain other expenses, which will affect the
relative performance
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<PAGE>
of the different classes. Investors may call 1-800-34-VISTA to obtain additional
information about other classes of shares of the Fund that are offered. Any
person entitled to receive compensation for selling or servicing shares of the
Fund may receive different levels of compensation with respect to one class of
shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
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<PAGE>
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income per share during a recent 30-day period by the
maximum public offering price per share of such class on the last day of that
period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the maximum public offering price (in the case of Class A shares) or
reflecting the deduction of any applicable contingent deferred sales charge (in
the case of Class B shares). Total return may also be presented for other
periods or without reflecting sales charges. Any quotation of investment
performance not reflecting the maximum initial sales charge or contingent
deferred sales charge would be reduced if such sales charges were used.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other mutual
funds and other investment vehicles. Quotation of investment performance for any
period when a fee waiver or expense limitation was in effect will be greater
than if the waiver or limitation had not been in effect. The Fund's performance
may be compared to other mutual funds, relevant indices and rankings prepared by
independent services. See the SAI.
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<PAGE>
MAKE THE MOST OF YOUR VISTA PRIVILEGES
The following services are available to you as a Vista mutual fund shareholder.
o SYSTEMATIC INVESTMENT PLAN - Invest as much as you wish ($100 or more) in
the first or third week of any month. The amount will be automatically
transferred from your checking or savings account.
o SYSTEMATIC WITHDRAWAL - Make regular withdrawals of $50 or more ($100 or
more for Class B accounts) monthly, quarterly or semiannually. A minimum
account balance of $5,000 is required to establish a systematic withdrawal
plan for Class A accounts.
o SYSTEMATIC EXCHANGE - Transfer assets automatically from one Vista account
to another on a regular, prearranged basis. There is no additional charge
for this service.
o FREE EXCHANGE PRIVILEGE - Exchange money between Vista funds in the same
class of shares without charge. The exchange privilege allows you to
adjust your investments as your objectives change.
Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange and systematic withdrawal or exchange.
o REINSTATEMENT PRIVILEGE - Class A shareholders have a one time privilege
of reinstating their investment in the Fund at net asset value next
determined subject to written request within 90 calendar days of the
redemption, accompanied by payment for the shares (not in excess of the
redemption).
Class B shareholders who have redeemed their shares and paid a CDSC with
such redemption may purchase Class A shares with no initial sales charge
(in an amount not in excess of their redemption proceeds) if the purchase
occurs within 90 days of the redemption of the Class B shares.
For more information about any of these services and privileges, call your
shareholder servicing agent, investment representative or the Vista Service
Center at 1-800-34-VISTA. These privileges are subject to change or termination.
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<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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<PAGE>
PROSPECTUS
VISTA[SM] SMALL CAP EQUITY FUND
Institutional Shares
May 6, 1996
Investment Strategy: Capital Growth
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-622-4273. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary........................................................
Fund Objective.........................................................
Investment Policies....................................................
Management.............................................................
How to Purchase, Redeem and Exchange Shares............................
How the Fund Values its Shares.........................................
How Distributions are Made; Tax Information............................
Other Information Concerning the Fund..................................
Performance Information................................................
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<PAGE>
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs and estimated annual expenses from
investing in the Institutional Shares of the Fund based on expenses incurred in
the most recent fiscal year. The example shows the cumulative expenses
attributable to a hypothetical $1,000 investment over specified periods.
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee.......................................... 0.65%
12b-1 Fee........................................................ None
Shareholder Servicing Fee (after estimated waiver)(*) 0.00%
Other Expenses................................................... 0.45%
-----
Total Fund Operating Expenses (after waiver of fee)(*) 1.10%
=====
Example
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Year 5 Years 10 Years
------ ------ ------- --------
Institutional Shares..... $11 $35 $61 $134
- -----------------------
* Reflects current waiver arrangement to maintain Total Fund Operating Expenses
at the level indicated in the table above. Absent such waiver, the Shareholder
Servicing Fee would be 0.25% and Total Fund Operating Expenses would be
1.35%. Chase has agreed voluntarily to waive fees payable to it and/or
reimburse expenses for a period of at least one year to the extent necessary
to prevent Total Fund Operating Expenses of Institutional Shares of the Fund
for such period from exceeding the amount indicated in the table. In addition,
Chase has agreed to waive fees payable to it and/or reimburse expenses for a
two year period to the extent necessary to prevent Total Fund Operating
Expenses of Institutional Share of the Fund from exceeding 1.22% during such
period.
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing
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<PAGE>
Agents may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
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<PAGE>
FUND OBJECTIVE
Vista Small Cap Equity Fund seeks long-term capital growth. The Fund is
not intended to be a complete investment program, and there is no assurance it
will achieve its objective.
INVESTMENT POLICIES
Investment Approach
Under normal market conditions, the Fund will invest at least 80% of its
total assets in equity securities and at least 65% of its total assets in equity
securities of smaller companies (i.e., those with market capitalizations of $750
million or less at the time of purchase). The Fund's advisers intend to utilize
both quantitative and fundamental research to identify undervalued stocks with a
catalyst for positive change. Current income is an incidental consideration to
the Fund's objective. You should be aware that an investment in smaller
companies may be more volatile than investments in companies with greater
capitalization, as described under "Risk Factors" below.
The Fund is classified as a "non-diversified" fund under federal
securities law. The Fund's assets may be more concentrated in the securities of
any single issuer or group of issuers than if the Fund were diversified.
The Fund may invest any portion of its assets not invested in equity
securities in high quality money market instruments and repurchase agreements.
For temporary defensive purposes, the Fund may invest without limitation in
these instruments. To the extent that the Fund departs from its investment
policies during temporary defensive periods, its investment objective may not be
achieved.
In lieu of investing directly, the Fund is authorized to seek to achieve
its objective by investing all of its investable assets in an investment company
having substantially the same investment objective and policies as the Fund.
Other Investment Practices
The Fund may also engage in the following investment practices, when
consistent with the Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI.
Foreign Securities. The Fund may invest up to 20% of its total assets in
foreign securities, including Depositary Receipts. Since foreign securities are
normally denominated and traded in foreign currencies, the values of the Fund's
foreign investments may be affected favorably or unfavorably by currency
exchange rates and exchange control regulations. There may be less information
publicly available about foreign companies than U.S. companies, and they are not
generally subject to accounting, auditing and financial reporting standards and
practices comparable to those in the U.S. The securities of foreign companies
may be less liquid and more volatile than the securities of comparable U.S.
companies. Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in payment or delivery of securities or in the
recovery of the Fund's assets held abroad) and expenses. It is possible that
nationalization or expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial instability and
diplomatic developments could affect the value of the Fund's investments in
certain foreign countries. Foreign laws may restrict the ability to invest in
certain issuers and special tax considerations will apply to foreign securities.
The risks can increase if the Fund invests in securities of issuers in emerging
markets.
The Fund may invest its assets in securities of foreign issuers in the
form of American Depositary Receipts, European Depositary Receipts, Global
Depositary Receipts or other similar securities representing securities of
foreign issuers (collectively, "Depositary Receipts"). The Fund treats
Depositary Receipts as interests in the underlying securities for purposes of
its investment policies. The Fund will limit its investment in Depositary
Receipts not sponsored by the issuer of the underlying securities to no more
than 5% of the value of its net assets (at the time of investment).
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<PAGE>
Money Market Instruments. The Fund may invest in cash or high-quality,
short-term money market instruments. Such instruments may include U.S.
Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Repurchase Agreements, Securities Loans and Forward Commitments. The Fund
may enter into agreements to purchase and resell securities at an agreed-upon
price and time. The Fund also has the ability to lend portfolio securities in an
amount equal to not more than 30% of its total assets to generate additional
income. These transactions must be fully collateralized at all times. The Fund
may purchase securities for delivery at a future date, which may increase its
overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date. These transactions involve
some risk to the Fund if the other party should default on its obligation and
the Fund is delayed or prevented from recovering the collateral or completing
the transaction.
Borrowings and Reverse Repurchase Agreements. The Fund may borrow money
from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Fund may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Fund enters into a reverse repurchase agreement, it
will establish a segregated account in which it will maintain liquid assets on a
daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Fund would be required to pay interest on amounts
obtained through reverse repurchase agreements, which are considered borrowings
under federal securities laws.
Stand-By Commitments. The Fund may enter into put transactions, including
transactions sometimes referred to as stand-by commitments, with respect to
money market instruments in its portfolio. In these transactions, the Fund would
acquire the right to sell a security at an agreed upon price within a specified
period prior to its maturity date. These transactions involve some risk to the
Fund if the other party should default on its obligation and the Fund is delayed
or prevented from recovering the collateral or completing the transaction.
Acquisition of puts will have the effect of increasing the cost of the
securities subject to the put and thereby reducing the yields otherwise
available from such securities.
Convertible Securities. The Fund may invest up to 20% of its net assets in
convertible securities, which are securities generally offering fixed interest
or dividend yields which may be converted either at a stated price or stated
rate for common or preferred stock. Although to a lesser extent than with
fixed-income securities generally, the market value of convertible securities
tends to decline as interest rates increase, and increase as interest rates
decline. Because of the conversion feature, the market value of convertible
securities also tends to vary with fluctuations in the market value of the
underlying common or preferred stock.
Other Investment Companies. The Fund may invest up to 10% of its total
assets in shares of other investment companies, subject to applicable regulatory
limitations.
STRIPS. The Fund may invest up to 20% of its total assets in separately
traded principal and interest components of securities backed by the full faith
and credit of the U.S. Government, including instruments known as "STRIPS".
The value of these instruments tends to fluctuate more in response to changes in
interest rates than the value of ordinary interest-paying debt securities with
similar maturities. The risk is greater when the period to maturity is longer.
Derivatives and Related Instruments. The Fund may invest its assets in
derivative and related instruments to hedge various market risks or to increase
the Fund's income or gain. Some of these instruments will be subject to asset
segregation requirements to cover the Fund's obligations. The Fund may (i)
purchase, write and exercise call and put options on securities and securities
indexes (including using options in combination with securities, other options
or derivative instruments); (ii) enter into swaps, futures contracts and options
on futures
-6-
<PAGE>
contracts; (iii) employ forward currency contracts; and (iv) purchase and sell
structured products, which are instruments designed to restructure or reflect
the characteristics of certain other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Fund invests may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of the Fund to successfully utilize
these instruments may depend in part upon the ability of the Fund's advisers to
forecast these factors correctly. Inaccurate forecasts could expose the Fund to
a risk of loss. There can be no guarantee that there will be a correlation
between price movements in a hedging instrument and in the portfolio assets
being hedged. The Fund is not required to use any hedging strategies. Hedging
strategies, while reducing risk of loss, can also reduce the opportunity for
gain. Derivatives transactions not involving hedging may have speculative
characteristics, involve leverage and result in more risk to the Fund than
hedging strategies using the same instruments. There can be no assurance that a
liquid market will exist at a time when the Fund seeks to close out a
derivatives position. Activities of large traders in the futures and securities
markets involving arbitrage, "program trading," and other investment strategies
may cause price distortions in derivatives markets. In certain instances,
particularly those involving over-the-counter transactions or forward contracts,
there is a greater potential that a counterparty or broker may default. In the
event of a default, the Fund may experience a loss. For additional information
concerning derivatives, related instruments and the associated risks, see the
SAI.
Portfolio Turnover. The frequency of the Portfolio's portfolio
transactions will vary from year to year. The Portfolio's investment policies
may lead to frequent changes in investments, particularly in periods of rapidly
changing market conditions. High portfolio turnover rates would generally result
in higher transaction costs, including brokerage commissions or dealer
mark-ups, and would make it more difficult for the Portfolio to qualify as a
registered investment company under federal tax law. See "How Distributions are
Made; Tax Information" and "Other Information Concerning the Fund -- Certain
Regulatory Matters."
Limiting Investment Risks
Specific investment restrictions help the Fund limit investment risks for
its shareholders. These restrictions prohibit the Fund from: (a) with respect to
50% of its total assets, holding more than 10% of the voting securities of any
issuer; (b) investing more than 15% of its net assets in illiquid securities
(which include securities restricted as to resale unless they are determined to
be readily marketable in accordance with procedures established by the Board of
Trustees); or (c) investing more than 25% of its total assets in any one
industry. A complete description of these and other investment policies is
included in the SAI. Except for the Fund's investment objective, restriction (c)
and investment policies designated as fundamental in the SAI, the Fund's
investment policies are not fundamental. The Trustees may change any
non-fundamental policy without shareholder approval.
Risk Factors
The net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities in the Fund's portfolio. The Fund is
aggressively managed and, therefore, the value of its shares is subject to
greater fluctuation and an investment in its shares involves a higher degree of
risk than an investment in a conservative equity fund or a growth fund investing
entirely in proven growth equities. An investment in the Fund should not be
considered a complete investment program and may not be appropriate for all
investors.
The securities of smaller companies often trade less frequently and in
more limited volume, and may be subject to more abrupt or erratic price
movements, than securities of larger, more established companies. Such companies
may have limited product lines, markets or financial resources, or may depend on
a limited management group. Because the Fund is "non-diversified," the value of
the its shares more susceptible to developments affecting issuers in which the
Fund invests.
For a discussion of certain other risks associated with the Fund's
additional investment activities, see "Other Investment Practices" above.
-7-
<PAGE>
MANAGEMENT
The Fund's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the Fund
pursuant to an Investment Advisory Agreement and has overall responsibility for
investment decisions of the Fund, subject to the oversight of the Board of
Trustees. Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation,
a bank holding company. Chase and its predecessors have over 100 years of money
management experience. For its investment advisory services to the Fund, Chase
is entitled to receive an annual fee computed daily and paid monthly based at an
annual rate equal to 0.65% of the Fund's average daily net assets. Chase is
located at 270 Park Avenue, New York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Fund pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly-owned operating subsidiary of
Chase. CAM makes investment decisions for the Fund on a day-to-day basis. For
these services, CAM is entitled to receive a fee, payable by Chase from its
advisory fee, at an annual rate equal to 0.30% of the Fund's average daily net
assets. CAM was recently formed for the purpose of providing discretionary
investment advisory services to institutional clients and to consolidate Chase's
investment management function. The same individuals who serve as portfolio
managers for Chase also serve as portfolio managers for CAM. CAM is located at
1211 Avenue of the Americas, New York, New York 10036.
Portfolio Managers. Dave Klassen, Director of Domestic Equity Management
at Chase, and Jill Greenwald, Vice President of Chase, have been responsible for
the day-to-day management of the Fund's portfolio since its inception. Mr.
Klassen joined Chase in March 1992 and, in addition to co-managing the Fund, is
responsible for co-managing the Vista Growth and Income Fund and the Vista
Capital Growth Fund. Prior to joining Chase, Mr. Klassen was a vice president
and portfolio manager at Dean Witter Reynolds, responsible for managing several
mutual funds and other accounts. Ms. Greenwald joined Chase in 1993,
specializing in small cap issues. Prior to joining Chase, Ms. Greenwald was a
Director for Prudential Equity Investors and a Senior Analyst for Fred Alger
Management, Inc.
HOW TO PURCHASE, REDEEM AND EXCHANGE SHARES
How to Purchase Shares
Institutional Shares may be purchased through selected financial service
firms, such as broker-dealer firms and banks ("Dealers") who have entered into a
selected dealer agreement with the Fund's distributor on each business day
during which the New York Stock Exchange is open for trading ("Fund Business
Day"). Qualified investors are defined as institutions, trusts, partnerships,
corporations, qualified and other retirement plans and fiduciary accounts opened
by a bank, trust company or thrift institution which exercises investment
authority over such accounts. The Fund reserves the right to reject any purchase
order or cease offering shares for purchase at any time.
Institutional Shares are sold at their public offering price, which is
their next determined net asset value. Orders received by Dealers in proper form
prior to the New York Stock Exchange closing time are confirmed at that day's
offering price, provided the order is received by the Vista Service Center prior
to its close of business. Dealers are responsible for forwarding orders for the
purchase of shares on a timely basis. Fund shares normally will be maintained in
book entry form and share certificates will be issued only upon request.
Management reserves the right to refuse to sell shares of the Fund to any
institution.
Federal regulations require that each investor provide a certified
Taxpayer Identification Number upon opening an account.
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<PAGE>
Minimum Investments
The Fund has established a minimum initial investment amount of $1,000,000
for the purchase of Institutional Shares. There is no minimum for subsequent
investments. Purchases of Institutional Shares offered by other non-money market
Vista funds may be aggregated with purchases of Institutional Shares of the Fund
to meet the $1,000,000 minimum initial investment amount requirement.
How to Redeem Shares
You may redeem all or any portion of the shares in your account at any
time at the net asset value next determined after a redemption request in proper
form is furnished by you to your Dealer and transmitted to and received by the
Vista Service Center. A wire redemption may be requested by telephone or wire to
the Vista Service Center. For telephone redemptions, call the Vista Service
Center at 1-800-622-4273.
In making redemption requests, the names of the registered shareholders on
your account and your account number must be supplied, along with any
certificates that represent shares you want to sell. The price you will receive
is the next net asset value calculated after the Fund receives your request in
proper form. In order to receive that day's net asset value, the Vista Service
Center must receive your request before the close of regular trading on the New
York Stock Exchange.
The Fund generally sends you payment for your shares by wire in federal
funds on the business day after your request is received. Under unusual
circumstances, the Fund may suspend redemptions, or postpone payment for more
than seven days, as permitted by federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her representative, who can
provide the fund with his or her account registration and address as it appears
on the Fund's records.
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request or contact your
Dealer. The Telephone Redemption Privilege is not available if you were issued
certificates for shares that remain outstanding. The Telephone Redemption
Privilege may be modified or terminated without notice.
Selling shares through your Dealer. Your Dealer must receive your request
before the close of regular trading on the New York Stock Exchange to receive
that day's net asset value. Your Dealer will be responsible for furnishing all
necessary documentation to the Vista Service Center, and may charge you for its
services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $1,000,000. In the event of any such redemption, you will
receive at least 60 days notice prior to the redemption.
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<PAGE>
How to Exchange Your Shares
You can exchange your shares for Institutional Shares of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer Institutional Shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully prior to any exchange
and retained for future reference.
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the amount or
number of exchanges or reject any exchange. In addition, any shareholder who
makes more than ten exchanges of shares involving the Fund in a year or three in
a calendar quarter will be charged a $5.00 administration fee for each such
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult the Vista Service Center before requesting an exchange.
The exchange privilege is subject to change or termination. See the SAI to find
out more about the exchange privilege.
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each Fund Business Day, by dividing the
net assets of the Fund attributable to that class by the total number of
outstanding shares of that class. Values of assets held by the Fund are
determined on the basis of their market or other fair value, as described in the
SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund distributes any net investment income at least semi-annually and
any net realized capital gains at least annually. Distributions from capital
gains are made after applying any available capital loss carryovers.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares; (2) receive distributions from net
investment income in cash or by ACH to a pre-established bank account while
reinvesting capital gains distributions in additional shares; or (3) receive all
distributions in cash or by ACH. You can change your distribution option by
notifying the Vista Service Center in writing. If you do not select an option
when you open your account, all distributions will be reinvested. All
distributions not paid in cash or by ACH will be reinvested in shares of the
class on which the distributions are paid. You will receive a statement
confirming reinvestment of distributions in additional Fund shares promptly
following the quarter in which the reinvestment occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested
-10-
<PAGE>
in the Fund. Similarly, if correspondence sent by the Fund or the Vista Service
Center is returned as "undeliverable," distributions will automatically be
reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
A portion of the ordinary income dividends paid by the Fund may qualify
for the 70% dividends-received deduction for corporate shareholders.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Institutional Shares of the Fund. These services
include assisting with purchase and redemption transactions, maintaining
shareholder accounts and records, furnishing customer statements, transmitting
shareholder reports and communications to customers and other similar
shareholder liaison services. For performing these services, each shareholder
servicing agent receives an annual fee of up to 0.25% of the average daily net
assets of Institutional Shares of the Fund held by investors for whom the
shareholder servicing agent maintains a servicing relationship. Shareholder
servicing agents may subcontract with other parties for the provision of
shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
-11-
<PAGE>
Administrator
Chase acts as administrator of the Fund and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets.
Sub-Administrator and Distributor
Vista Fund Distributors, Inc. ("VFD") acts as the Fund's sub-administrator
and distributor. VFD is a subsidiary of The BISYS Group, Inc. and is
unaffiliated with Chase. For the sub-administrative services it performs, VFD is
entitled to receive a fee from the Fund at an annual rate equal to 0.05% of the
Fund's average daily net assets. VFD has agreed to use a portion of this fee to
pay for certain expenses incurred in connection with organizing new series of
the Trust and certain other ongoing expenses of the Trust. VFD is located at 101
Park Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Shareholder servicing and
distribution fees are allocated to specific classes of the Fund. In addition,
the Fund may allocate transfer agency and certain other expenses by class.
Service providers to the Fund may, from time to time, voluntarily waive all or a
portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Shares have no
pre-emptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of the Fund generally vote
together except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class.
The Fund issues multiple classes of shares. This Prospectus relates only
to Institutional Shares of the Fund, one class of shares offered by the Fund.
Institutional Shares may be purchased only by qualified investors that make an
initial investment of $1,000,000 or more. "Qualified investors" are defined as
institutions, trusts, partnerships,
-12-
<PAGE>
corporations, qualified and other retirement plans and fiduciary accounts opened
by a bank, trust company or thrift institution which exercises investment
authority over such accounts. The Fund offers other classes of shares in
addition to these classes. The categories of investors that are eligible to
purchase shares may differ for each class of Fund shares. In addition, other
classes of Fund shares may be subject to differences in sales charge
arrangements, ongoing distribution and service fee levels, and levels of certain
other expenses, which will affect the relative performance of the different
classes. Investors may call 1-800-622-4273 to obtain additional information
about other classes of shares of the Fund that are offered. Any person entitled
to receive compensation for selling or servicing shares of the Fund may receive
different levels of compensation with respect to one class of shares over
another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
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<PAGE>
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income per share during a recent 30-day period by the
maximum public offering price per share of such class on the last day of that
period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the public offering price. Total return may also be presented for
other periods.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other mutual
funds and other investment vehicles. Quotation of investment performance for any
period when a fee waiver or expense limitation was in effect will be greater
than if the waiver or limitation had not been in effect. The Fund's performance
may be compared to other mutual funds, relevant indices and rankings prepared by
independent services. See the SAI.
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<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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PROSPECTUS
VISTA[SM] AMERICAN VALUE FUND
May 6, 1996
Investment Strategy: Total Return
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-34-VISTA. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary..........................................................
The expenses you might pay on your Fund investment, including examples
Financial Highlights.....................................................
How the Fund has performed
Fund Objective...........................................................
Investment Policies......................................................
The kinds of securities in which the Fund invests,
investment policies and techniques, and risks
Management...............................................................
Chase Manhattan Bank, the Fund's adviser; Van Deventer & Hoch,
the Fund's sub-adviser, and the individuals who manage the Fund
How to Buy, Sell and Exchange Shares.....................................
How the Fund Values its Shares...........................................
How Distributions are Made; Tax Information..............................
How the Fund distributes its earnings, and
tax treatment related to those earnings
Other Information Concerning the Fund....................................
Distribution plans, shareholder servicing agents, administration,
custodian, expenses, organization and regulatory matters
Performance Information..................................................
How performance is determined, stated and/or advertised
Make the Most of Your Vista Privileges...................................
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EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the Fund based on
estimated expenses for the current fiscal year. The example shows the cumulative
expenses attributable to a hypothetical $1,000 investment over specified
periods.
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)................................. None
Maximum Deferred Sales Charge
(as a percentage of the lower of original
purchase price or redemption proceeds).............................. None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee (after estimated waiver)(*)................. 0.00%
12b-1 Fee (after estimated waiver)(*)(**)........................... 0.00%
Shareholder Servicing Fee (after estimated waiver) (*).............. 0.12%
Other Expenses (after estimated waiver)(*).......................... 1.20%
-----
Total Fund Operating Expenses (after waivers of fees)(*)............ 1.32%
=====
Example
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Years
------ -------
Institutional Shares ............ $13 $42
- -----------------------
* Reflects current waiver arrangements to maintain Total Fund Operating
Expenses at the level indicated in the table above. Absent such waivers, the
Investment Advisory Fee, 12b-1 Fee, Shareholder Servicing Fee and Other
Expenses would be 0.70%, 0.25%, 0.25% and 1.30%, respectively, and Total Fund
Operating Expenses would be 2.50%. Chase has agreed voluntarily to waive fees
payable to it and/or reimburse expenses for a period of at least one year
to the extent necessary to prevent Total Fund Operating Expenses for such
period from exceeding the amount indicated in the table. In addition, Chase
has agreed to waive fees payable to it and/or reimburse expenses for a two
year period to the extent necessary to prevent Total Fund Operating Expenses
from exceeding 2.18% of average net assets during such period.
**Long-term shareholders in mutual funds with 12b-1 fees, such as shareholders
of the Fund, may pay more than the economic equivalent of the maximum
front-end sales charge permitted by rules of the National Association of
Securities Dealers, Inc.
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<PAGE>
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
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<PAGE>
FINANCIAL HIGHLIGHTS
On May 3, 1996, The Hanover American Value Fund (the "Predecessor Fund")
merged into Vista American Value Fund, which was created to be the successor to
the Predecessor Fund. The table set forth below provides selected per share data
and ratios for one Investor Share of the Predecessor Fund for each period shown.
This information is supplemented by financial statements and accompanying notes
appearing in the Predecessor Fund's Annual Report to Shareholders for the fiscal
year ended November 30, 1995, which is incorporated by reference into the SAI.
The financial statements and notes, as well as the financial information set
forth in the table below, unless otherwise indicated, have been audited by KPMG
Peat Marwick LLP independent accountants whose report thereon is also included
in the Predecessor Fund's Annual Report to Shareholders. Shareholders can obtain
a copy of this Annual Report by contacting the Fund or their Shareholder
Servicing Agent.
Vista American Value Fund
Period End
November 30, 1995*
------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------
Net Asset Value, Beginning of Period....................... $10.000
-------
Income from Investment Operations:
Net Investment Income................................ 0.180
Net Gain on Securities
(both realized and unrealized)..................... 2.000
------
Total from Investment Operations..................... 2.180
------
Less Distributions:
Dividends from Net Investment Income................. (0.070)
Distributions from Capital Gains..................... --
-------
Total Distributions.................................. (0.070)
-------
Net Asset Value, End of Period............................. $12.110
=======
Total Return ***........................................... 21.80%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted)................. $8,399
Ratio of Expenses to Average Net Assets #............... 1.23%
Ratio of Net Investment Income to Average Net Assets #.. 1.97%
Ratio of Expenses without waivers and assumption of
expenses to Average Net Assets #..................... 2.03%
Ratio of Net Investment Income without waivers and
assumption of expenses to Average Net Assets
(unaudited)#......................................... 1.17%
Portfolio Turnover Rate.................................... 11.28%
- ----------------------
# Short periods have been annualized.
* Fund commenced operations on February 3, 1995.
*** Total Return figures do not include the effect of any sales load.
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FUND OBJECTIVE
Vista American Value Fund seeks to maximize total return, consisting of
capital appreciation (both realized and unrealized) and income, by investing
primarily in the equity securities of well-established U.S. companies (i.e.,
companies with at least a five-year operating history) which, in the opinion of
the Fund's advisers, are undervalued by the market. The Fund is not intended to
be a complete investment program, and there is no assurance it will achieve its
objective.
INVESTMENT POLICIES
Investment Approach
The equity securities in which the Fund invests generally consist of
common stock, preferred stock and securities convertible into or exchangeable
for common or preferred stock. Under normal market conditions, at least 65% of
the value of the Fund's total assets will be invested in the equity securities
of U.S. companies. The Fund may invest in companies without regard to market
capitalization, although it generally does not expect to invest in companies
with market capitalizations of less than $200 million. The securities in which
the Fund invests are expected to be either listed on an exchange or traded in an
over-the-counter market.
In selecting investments for the Fund, its advisers generally seek
companies which they believe exhibit characteristics of financial soundness and
are undervalued by the market. In seeking to identify financially sound
companies, the Fund's advisers look for companies with strongly capitalized
balance sheets, an ability to generate substantial cash flow, relatively low
levels of leverage, an ability to meet debt service requirements and a history
of paying dividends. In seeking to identify undervalued companies, the advisers
look for companies with substantial tangible assets such as land, timber, oil
and other natural resources, or important brand names, patents, franchises or
other intangible assets which may have greater value than what is reflected in
the company's financial statements. The Fund's advisers will often select
investments for the Fund which are considered to be unattractive by other
investors or are unpopular with the financial press.
Although the Fund invests primarily in equity securities, it may invest up
to 25% of the value of its total assets in high quality, short-term money market
instruments, repurchase agreements and cash. In addition, the Fund may make
substantial temporary investments in investment grade U.S. debt securities and
invest without limit in money market instruments when the Fund's advisers
believe a defensive posture is warranted. To the extent that the Fund departs
from its investment policies during temporary defensive periods, its investment
objective may not be achieved.
The Fund is classified as a "diversified" fund under federal securities
law.
In lieu of investing directly, the Fund is authorized to seek to achieve
its objective by investing all of its investable asets in an investment company
having substantially the same investment objective and policies as the Fund.
Other Investment Practices
The Fund may also engage in the following investment practices, when
consistent with the Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI.
Foreign Securities. The Fund may invest up to 20% of its total assets in
foreign securities, including American Depositary Receipts. The Fund expects
that its investments in foreign issuers, if any, will generally be in companies
which generate substantial revenues from U.S. operations and which are listed on
U.S. securities exchanges. Since foreign securities are normally denominated and
traded in foreign currencies, the values of the Fund's foreign investments may
be affected favorably or unfavorably by currency exchange rates and exchange
control regulations. There may be less information publicly available about
foreign companies than U.S. companies, and they are not generally subject to
accounting, auditing and financial reporting standards and practices comparable
to those in the U.S. The securities of foreign companies may be less liquid and
more volatile than the securities of comparable U.S. companies. Foreign
settlement procedures and trade regulations may involve certain risks (such as
delay in payment or delivery of securities or in the recovery of the Fund's
assets held abroad) and
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expenses. It is possible that nationalization or expropriation of assets,
imposition of currency exchange controls, confiscatory taxation, political or
financial instability and diplomatic developments could affect the value of the
Fund's investments in certain foreign countries. Foreign laws may restrict the
ability to invest in certain issuers or countries and special tax considerations
will apply to foreign securities. The risks can increase if the Fund invests in
securities of issuers in emerging markets.
The Fund may invest its assets in securities of foreign issuers in the
form of American Depositary Receipts, which are securities representing
securities of foreign issuers. The Fund treats American Depositary Receipts as
interests in the underlying securities for purposes of its investment policies.
The Fund will limit its investment in American Depositary Receipts not sponsored
by the issuer of the underlying securities to no more than 5% of the value of
its net assets (at the time of investment).
Money Market Instruments. The Fund may invest in cash or high-quality,
short-term money market instruments. Such instruments may include U.S.
Government securities, commercial paper of domestic issuers and obligations of
domestic banks.
Investment Grade Debt Securities. Investment grade debt securities are
securities rated in the category BBB or higher by Standard & Poor's Corporation
("S&P"), or Baa or higher by Moody's Investors Services, Inc. ("Moody's") or the
equivalent by another national rating organization, or, if unrated, determined
by the advisers to be of comparable quality.
Repurchase Agreements, Securities Loans and Forward Commitments. The Fund
may enter into agreements to purchase and resell securities at an agreed-upon
price and time. The Fund also has the ability to lend portfolio securities in an
amount equal to not more than 30% of its total assets to generate additional
income. These transactions must be fully collateralized at all times. The Fund
may purchase securities for delivery at a future date, which may increase its
overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date. These transactions involve
some risk to the Fund if the other party should default on its obligation and
the Fund is delayed or prevented from recovering the collateral or completing
the transaction.
Borrowings and Reverse Repurchase Agreements. The Fund may borrow money
from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Fund may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Fund enters into a reverse repurchase agreement, it
will establish a segregated account in which it will maintain liquid assets on a
daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Fund would be required to pay interest on amounts
obtained through reverse repurchase agreements, which are considered borrowings
under federal securities laws.
Convertible Securities. The Fund may invest in convertible securities,
which are securities generally offering fixed interest or dividend yields which
may be converted either at a stated price or stated rate for common or preferred
stock. Although to a lesser extent than with fixed-income securities generally,
the market value of convertible securities tends to decline as interest rates
increase, and increase as interest rates decline. Because of the conversion
feature, the market value of convertible securities also tends to vary with
fluctuations in the market value of the underlying common or preferred stock.
Corporate Reorganizations. The Fund may invest in securities for which a
tender or exchange offer has been made or announced and in securities of
companies for which a merger, consolidation, liquidation or similar
reorganization proposal has been announced if, in the judgment of its
advisers, there is a reasonable prospect of capital appreciation significantly
greater than the added portfolio turnover expenses inherent in the short-term
nature of such transactions. The principal risk is that such offers or
proposals may not be consummated within the time and under the terms
contemplated at the time of investment, in which case, unless such offers or
proposals are replaced by equivalent or increased offers or proposals which are
consummated, the Fund may sustain a loss.
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Warrants. The Fund may invest up to 5% of the value of its total assets
(at the time of investment) in warrants or rights (other than those acquired in
units or attached to other securities) which entitle the holder to buy equity
securities at a specific price during or at the end of a specific period of
time. The Fund will not invest more than 2% of the value of its total assets in
warrants or rights which are not listed on the New York or American Stock
Exchanges.
Other Investment Companies. The Fund may invest up to 10% of its total
assets in shares of other investment companies, subject to applicable regulatory
limitations.
Derivatives and Related Instruments. The Fund has no current intention to
invest in derivative and related instruments, but the Fund is authorized to
utilize these instruments to hedge various market risks or to increase the
Fund's income or gain. Some of these instruments will be subject to asset
segregation requirements to cover the Fund's obligations. The Fund may (i)
purchase, write and exercise call and put options on securities and securities
indexes (including using options in combination with securities, other options
or derivative instruments); (ii) enter into swaps, futures contracts and options
on futures contracts; and (iii) employ forward contracts.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Fund invests may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of the Fund to successfully utilize
these instruments may depend in part upon the ability of the Fund's advisers to
forecast these factors correctly. Inaccurate forecasts could expose the Fund to
a risk of loss. There can be no guarantee that there will be a correlation
between price movements in a hedging instrument and in the portfolio assets
being hedged. The Fund is not required to use any hedging strategies. Hedging
strategies, while reducing risk of loss, can also reduce the opportunity for
gain. Derivatives transactions not involving hedging may have speculative
characteristics, involve leverage and result in more risk to the Fund than
hedging strategies using the same instruments. There can be no assurance that a
liquid market will exist at a time when the Fund seeks to close out a
derivatives position. Activities of large traders in the futures and securities
markets involving arbitrage, "program trading," and other investment strategies
may cause price distortions in derivatives markets. In certain instances,
particularly those involving over-the-counter transactions or forward contracts,
there is a greater potential that a counterparty or broker may default. In the
event of a default, the Fund may experience a loss. For additional information
concerning derivatives, related instruments and the associated risks, see the
SAI.
Portfolio Turnover. The frequency of the Fund's portfolio transactions
will vary from year to year. The Fund's investment policies may lead to frequent
changes in investments, particularly in periods of rapidly changing market
conditions. High portfolio turnover rates would generally result in higher
transaction costs, including brokerage commissions or dealer mark-ups, and would
make it more difficult for the Fund to qualify as a registered investment
company under federal tax law. See "How Distributions are Made; Tax Information"
and "Other Information Concerning the Fund--Certain Regulatory Matters."
Limiting Investment Risks
Specific investment restrictions help the Fund limit investment risks for
its shareholders. These restrictions prohibit the Fund from: (a) with respect to
75% of its total assets, holding more than 10% of the voting securities of any
issuer or investing more than 5% of its total assets in the securities of any
one issuer (other than U.S. Government obligations); (b) investing more than 15%
of its net assets in illiquid securities (which include securities restricted as
to resale unless they are determined to be readily marketable in accordance with
procedures established by the Board of Trustees); or (c) investing more than 25%
of its total assets in any one industry. A complete description of these and
other investment policies is included in the SAI. Except for the Fund's
investment objective, restriction (c) above and investment policies designated
as fundamental in the SAI, the Fund's investment policies are not fundamental.
The Trustees may change any non-fundamental investment policy without
shareholder approval.
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Risk Factors
The Fund does not constitute a balanced or complete investment program,
and the net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities in the Fund's portfolio. The Fund is
subject to the general risks and considerations associated with equity
investing, as well as the risks discussed herein.
Some of the securities in which the Fund may invest may be of smaller
companies. The securities of smaller companies often trade less frequently and
in more limited volume, and may be subject to more abrupt or erratic price
movements, than securities of larger, more established companies. Such companies
may have limited product lines, markets or financial resources, or may depend on
a limited management group.
For a discussion of certain other risks associated with the Fund's
additional investment activities, see "Other Investment Practices" above.
MANAGEMENT
The Fund's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the Fund
pursuant to an Investment Advisory Agreement and has overall responsibility for
investment decisions of the Fund, subject to the oversight of the Board of
Trustees. Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation,
a bank holding company. Chase and its predecessors have over 100 years of money
management experience. For its investment advisory services to the Fund, Chase
is entitled to receive an annual fee computed daily and paid monthly based at an
annual rate equal to 0.70% of the Fund's average daily net assets. Chase is
located at 270 Park Avenue, New York, New York 10017.
Van Deventer & Hoch ("VDH"), a registered investment adviser, is the
sub-investment adviser to the Fund pursuant to a Sub-Investment Advisory
Agreement between VDH and Chase. VDH is a 50% owned indirect subsidiary of The
Chase Manhattan Corporation. VDH makes investment decisions for the Fund on a
day-to-day basis. For these services, VDH is entitled to receive a fee, payable
by Chase from its advisory fee, at an annual rate equal to 0.35% of the Fund's
average daily net assets. VDH is located at 800 North Brand Boulevard, Suite
300, Glendale, California 91203.
Portfolio Manager. Richard Trautwein, Executive Vice President of VDH, has
been responsible for the day-to-day management of the Fund's portfolio since the
Fund's inception and prior thereto, was responsible for the day-to-day
management of The Hanover American Value Fund, the Fund's predecessor. Mr.
Trautwein joined VDH in 1972, heads the firm's portfolio group and is a member
of the firm's investment policy committee.
HOW TO BUY, SELL AND EXCHANGE SHARES
How to Buy Shares
You can open a Fund account with as little as $2,500 ($1,000 for IRAs,
SEP-IRAs and the Systematic Investment Plan) and make additional investments at
any time with as little as $100. You can buy Fund shares three ways--through an
investment representative, through the Fund's distributor by calling the Vista
Service Center, or through the Systematic Investment Plan.
All purchases made by check should be in U.S. dollars and made payable to
the Vista Funds. Third party checks, credit cards and cash will not be accepted.
The Fund reserves the right to reject any purchase order or cease offering
shares for purchase at any time. When purchases are made by check, redemptions
will not be
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allowed until clearance of the purchase check, which may take 15 calendar days
or longer. In addition, the redemption of shares purchased through ACH will not
be allowed until clearance of your payment which may take 7 business days or
longer.
Buying shares through the Fund's distributor. Complete and return the
enclosed application and your check in the amount you wish to invest to the
Vista Service Center.
Buying shares through systematic investing. You can make regular
investments of $100 or more per transaction through automatic periodic deduction
from your bank checking or savings account. Shareholders electing to start this
Systematic Investment Plan when opening an account should complete Section 8 of
the account application. Current shareholders may begin such a plan at any time
by sending a signed letter with signature guarantee and a deposit slip or voided
check to the Vista Service Center. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Shares are sold at the public offering price based on the net asset value
next determined after the Vista Service Center receives your order in proper
form. In most cases, in order to receive that day's public offering price, the
Vista Service Center must receive your order before the close of regular trading
on the New York Stock Exchange. If you buy shares through your investment
representative, the representative must receive your order before the close of
regular trading on the New York Stock Exchange to receive that day's public
offering price. Orders for shares are accepted by the Fund after funds are
converted to federal funds. Orders paid by check and received by 2:00 p.m.,
Eastern Time will generally be available for the purchase of shares the
following business day.
If you are considering redeeming or exchanging shares or transferring
shares to another person shortly after purchase, you should pay for those shares
with a certified check to avoid any delay in redemption, exchange or transfer.
Otherwise the Fund may delay payment until the purchase price of those shares
has been collected or, if you redeem by telephone, until 15 calendar days after
the purchase date. To eliminate the need for safekeeping, the Fund will not
issue certificates for your shares unless you request them.
Offering Price
The public offering price of the shares is the net asset value. The fund
receives the net asset value.
How to Sell Shares
You can sell your shares to the Fund any day the New York Stock Exchange is
open, either directly to the Fund or through your investment representative. The
Fund will forward redemption payments on redeem shares for which it has
collected payment of the purchase price.
Selling shares directly to the Fund. Send a signed letter of instruction
to the Vista Service Center, along with any certificates that represent shares
you want to sell. The price you will receive is the next net asset value
calculated after the Fund receives your request in proper form. In order to
receive that day's net asset value, the Vista Service Center must receive your
request before the close of regular trading on the New York Stock Exchange.
If you sell shares having a net asset value of $100,000 or more, the
signatures of registered owners or their legal representatives must be
guaranteed by a bank, broker-dealer or certain other financial institutions. See
the SAI for more information about where to obtain a signature guarantee.
If you want your redemption proceeds sent to an address other than your
address as it appears on Vista's records, a signature guarantee is required. The
Fund may require additional documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Vista Service Center for details.
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The Fund generally sends you payment for your shares the business day after
your request is received, assuming the Fund has collected payment of the
purchase price of your shares. Under unusual circumstances, the Fund may suspend
redemptions, or postpone payment for more than seven days, as permitted by
federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request, as described above,
or contact your investment representative. The Telephone Redemption Privilege is
not available if you were issued certificates for shares that remain
outstanding. The Telephone Redemption Privilege may be modified or terminated
without notice.
Systematic withdrawal. You can make regular withdrawals of $50 or more
monthly, quarterly or semiannually. A minimum account balance of $5,000 is
required to establish a systematic withdrawal plan. Call the Vista Service
Center at 1-800-34-VISTA for complete instructions.
Selling shares through your investment representative. Your investment
representative must receive your request before the close of regular trading on
the New York Stock Exchange to receive that day's net asset value. Your
investment representative will be responsible for furnishing all necessary
documentation to the Vista Service Center, and may charge you for its services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $500 or if you purchase through the Systematic Investment
Plan and fail to meet the Fund's investment minimum within a twelve month
period. In the event of any such redemption, you will receive at least 60 days
notice prior to the redemption.
How to Exchange Your Shares
You can exchange your shares for Class A shares of certain other Vista
funds at net asset value beginning 15 days after purchase. Not all Vista funds
offer all classes of shares. The prospectus of the other Vista fund into which
shares are being exchanged should be read carefully and retained for future
reference.
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the
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amount or number of exchanges or reject any exchange. In addition, any
shareholder who makes more than ten exchanges of shares involving the Fund in a
year or three in a calendar quarter will be charged a $5.00 administration fee
for each such exchange. Shareholders would be notified of any such action to the
extent required by law. Consult the Vista Service Center before requesting an
exchange. See the SAI to find out more about the exchange privilege.
Reinstatement privilege. Shareholders have a one time privilege of
reinstating their investment in the Fund at net asset value next determined
subject to written request within 90 calendar days of the redemption,
accompanied by payment for the shares (not in excess of the redemption).
HOW THE FUND VALUES ITS SHARES
The net asset value of the Fund's shares is determined once daily based
upon prices determined as of the close of regular trading on the New York Stock
Exchange (normally 4:00 p.m., Eastern time, however, options are priced at 4:15
p.m., Eastern time), on each business day of the Fund, by dividing the net
assets of the Fund by the total number of outstanding shares. Values of assets
held by the Fund are determined on the basis of their market or other fair
value, as described in the SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund distributes any net investment income at least annually and any
net realized capital gains at least annually. Distributions from capital gains
are made after applying any available capital loss carryovers.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares without a sales charge; (2) receive
distributions from net investment income in cash or by ACH to a pre-established
bank account while reinvesting capital gains distributions in additional shares
without a sales charge; or (3) receive all distributions in cash or by ACH. You
can change your distribution option by notifying the Vista Service Center in
writing. If you do not select an option when you open your account, all
distributions will be reinvested. All distributions not paid in cash or by ACH
will be reinvested in shares of the Fund. You will receive a statement
confirming reinvestment of distributions in additional Fund shares promptly
following the quarter in which the reinvestment occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
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Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Distribution Plans
The Fund's distributor is Vista Fund Distributors, Inc. ("VFD"). VFD is a
subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase. The Trust
has adopted a Rule 12b-1 distribution plan for the Fund's shares which provides
that the Fund will pay distribution fees at annual rates of up to 0.25% of the
average daily net assets attributable to the shares of the Fund. Payments under
the distribution plans shall be used to compensate or reimburse the Fund's
distributor and broker-dealers for services provided and expenses incurred in
connection with the sale of the Fund's shares, and are not tied to the amount of
actual expenses incurred. Payments may be used to compensate broker-dealers with
trail or maintenance commissions at an annual rate of up to 0.25% of the average
daily net asset value of shares maintained in the Fund by customers of these
broker-dealers. Trail or maintenance commissions are paid to broker-dealers
beginning the 13th month following the purchase of shares by their customers.
Some activities intended to promote the sale of the Fund's shares will be
conducted generally by the Vista Family of Funds, and activities intended to
promote the Fund's shares may also benefit other Vista funds.
VFD may provide promotional incentives to broker-dealers that meet
specified sales targets for one or more Vista funds. These incentives may
include gifts of up to $100 per person annually; an occasional meal, ticket to a
sporting event or theater or entertainment for broker-deals and their guests;
and payment or reimbursement for their guests; and payment or reimbursement for
travel expenses, including lodging and meals, in connection with attendance at
training and educational meetings within and outside the U.S.
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own shares of the Fund. These services include
assisting with purchase and redemption transactions, maintaining shareholder
accounts and records, furnishing customer statements, transmitting shareholder
reports and communications to customers and other similar shareholder liaison
services. For performing these services, each shareholder servicing agent
receives an annual fee of up to 0.25% of the average daily net assets of shares
of the Fund held by investors for whom the shareholder servicing agent maintains
a servicing relationship. Shareholder servicing agents may subcontract with
other parties for the provision of shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator and Sub-Administrator
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Chase acts as the Fund's administrator and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets.
VFD provides certain sub-administrative services to the Fund pursuant to a
distribution and sub-administration agreement and is entitled to receive a fee
for these services from the Fund at an annual rate equal to 0.05% of the Fund's
average daily net assets. VFD has agreed to use a portion of this fee to pay for
certain expenses incurred in connection with organizing new series of the Trust
and certain other ongoing expenses of the Trust. VFD is located at 101 Park
Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Service providers to the Fund may,
from time to time, voluntarily waive all or a portion of any fees to which they
are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Shares have no
preemptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
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<PAGE>
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. "Yield' for the shares is calculated by dividing
the annualized net investment income per share during a recent 30-day period by
the maximum public offering price per share of such class on the last day of the
period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the maximum public offering price. Total return may also be
presented for other periods. Any quotation of investment performance not
reflecting the maximum initial sales charge or contingent deferred sales charge
would be reduced if such sales charges were used.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio and the Fund's operating expenses. Investment performance also
often reflects the risks associated with the Fund's investment objectives and
policies. These factors should be considered when comparing the Fund's
investment results to those of other mutual funds and other investment vehicles.
Quotation of investment performance for any period when a fee waiver or expense
limitation was in effect will be greater than if the waiver or limitation had
not been in effect. The Fund's performance may be compared to other mutual
funds, relevant indices and rankings prepared by independent services. See the
SAI.
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<PAGE>
MAKE THE MOST OF YOUR VISTA PRIVILEGES
The following services are available to you as a Vista mutual fund shareholder.
o SYSTEMATIC INVESTMENT PLAN - Invest as much as you wish ($100 or more) in
the first or third week of any month. The amount will be automatically
transferred from your checking or savings account.
o SYSTEMATIC WITHDRAWAL - Make regular withdrawals of $50 or more monthly,
quarterly or semiannually. A minimum account balance of $5,000 is required
to establish a systematic withdrawal plan.
o SYSTEMATIC EXCHANGE - Transfer assets automatically from one Vista account
to another on a regular, prearranged basis. There is no additional charge
for this service.
o FREE EXCHANGE PRIVILEGE - Exchange money between Vista funds in the same
class of shares without charge. The exchange privilege allows you to
adjust your investments as your objectives change.
Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange and systematic withdrawal or exchange.
o REINSTATEMENT PRIVILEGE - Shareholders have a one time privilege of
reinstating their investment in the Fund at net asset value next
determined subject to written request within 90 calendar days of the
redemption, accompanied by payment for the shares (not in excess of the
redemption).
For more information about any of these services and privileges, call your
shareholder servicing agent investment representative or the Vista Service
Center at 1-800-34-VISTA. These privileges are subject to change or termination.
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<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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<PAGE>
PROSPECTUS
VISTA[SM] U.S. GOVERNMENT SECURITIES FUND
Class A Shares
May 6, 1996
Investment Strategy: Total Return
This Prospectus explains concisely what you should know before investing. Please
read it carefully and keep it for future reference. You can find more detailed
information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-34-VISTA. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN
BANK OR ANY OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR
OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary...........................................................
The expenses you might pay on your Fund investment, including examples
Fund Objective............................................................
Investment Policies.......................................................
The kinds of securities in which the Fund invests,
investment policies and techniques, and risks
Management................................................................
Chase Manhattan Bank, the Fund's adviser; Chase Asset Management,
the Fund's sub-adviser, and the individuals who manage the Fund
How to Buy, Sell and Exchange Shares......................................
How the Fund Values its Shares............................................
How Distributions are Made; Tax Information...............................
How the Fund distributes its earnings, and
tax treatment related to those earnings
Other Information Concerning the Fund.....................................
Distribution plans, shareholder servicing agents, administration,
custodian, expenses, organization and regulatory matters
Performance Information...................................................
How performance is determined, stated and/or advertised
Make the Most of Your Vista Privileges....................................
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<PAGE>
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the Class A shares of
the Fund based on estimated expenses for the current fiscal year. The examples
show the cumulative expenses attributable to a hypothetical $1,000 investment
over specified periods.
Class A
Shareholder Transaction Expenses Shares
-------
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)................................. 4.50%
Maximum Deferred Sales Charge
(as a percentage of the lower of original
purchase price or redemption proceeds).............................. None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee............................................. 0.30%
12b-1 Fee(*)........................................................ 0.25%
Shareholder Servicing Fee (after estimated waiver)(**).............. 0.15%
Other Expenses...................................................... 0.35%
-----
Total Fund Operating Expenses(after waiver of fee)(**).............. 1.05%
=====
Example
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Years
------ -------
Class A Shares(+)................ $55 $77
- -----------------------
* Long-term shareholders in mutual funds with 12b-1 fees, such as Class A
shareholders of the Fund, may pay more than the economic equivalent of the
maximum front-end sales charge permitted by rules of the National
Association of Securities Dealers, Inc.
** Reflects current waiver arrangement to maintain Total Fund Operating
Expenses at the level indicated in the table above. Absent such waiver,
the Shareholder Servicing Fee would be 0.25% and Total Fund Operating
Expenses would be 1.15%.
+ Assumes deduction at the time of purchase of the maximum sales charge.
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
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<PAGE>
FUTURE EXPENSES OR RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS
THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
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<PAGE>
FUND OBJECTIVE
Vista U.S. Government Securities Fund seeks as high a level of total
return as is consistent with the preservation of capital. Total return consists
of income and capital appreciation. The Fund is not intended to be a complete
investment program, and there is no assurance it will achieve its objective.
INVESTMENT POLICIES
Investment Approach
Under normal market conditions, the Fund will invest at least 65% of its
total assets in securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, and related repurchase agreements. There is no
restriction on the maturity of the Fund's portfolio or any individual portfolio
security, and the Fund's advisers are free to take advantage of the entire range
of maturities of securities eligible for the Fund's portfolio. The Fund may
invest extensively in mortgage-backed securities issued or guaranteed by certain
agencies of the U.S. Government, as described below.
The Fund's advisers may adjust the average maturity of the Fund's
portfolio based upon their assessment of the relative yields available on
securities of different maturities and their expectations of future changes in
interest rates. Since the Fund invests extensively in U.S. Government
securities, certain of which have less credit risk than that associated with
other securities, the level of income achieved by the Fund may not be as high as
that of other funds which invest in lower quality securities.
The Fund may invest the portion of its assets not invested in U.S.
Government securities and related repurchase agreements in nonconvertible
corporate debt securities of domestic and foreign issuers, such as bonds and
debentures. These securities must be rated, at the time of investment, at least
in the category A or the equivalent by Moody's Investors Service, Inc., or
Standard & Poor's Corporation, or Fitch Investor's Service Inc., or another
national rating organization, or if unrated, of comparable quality as determined
by the Fund's advisers.
The Fund may invest any portion of its assets not invested as described
above in high quality money market instruments and repurchase agreements. For
temporary defensive purposes, the Fund may invest without limitation in these
instruments. To the extent that the Fund departs from its investment policies
during temporary defensive periods, its investment objective may not be
achieved.
The Fund is classified as a "diversified" fund under federal securities
law.
In lieu of investing directly, the Fund is authorized to seek to achieve
its objective by investing all of its investable assets in an investment company
having substantially the same investment objective and policies as the Fund.
Other Investment Practices
The Fund may also engage in the following investment practices, when
consistent with the Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI.
U.S. Government Securities. The Fund may invest in U.S. Treasury
obligations, which are bills, notes and bonds backed by the full faith and
credit of the U.S. Government as to payment of principal and interest which
generally differ only in their interest rates and maturities. The Fund also may
invest in securities issued or guaranteed by U.S. Government agencies and
instrumentalities, including obligations that are supported by the full faith
and credit of the U.S. Treasury, the limited authority of the issuer or
guarantor to borrow from the U.S. Treasury, or only the credit of the issuer or
guarantor. In the case of obligations not backed by the full faith and credit of
the U.S. Treasury, the agency issuing or guaranteeing the obligation is
principally responsible for ultimate repayment.
Foreign Securities. The Fund may invest in foreign obligations issued or
guaranteed by foreign governments and supranational entities, and in
non-convertible corporate debt securities of foreign issuers.
-5-
<PAGE>
Supranational entities include organizations such as The World Bank, the
European Community, the European Coal and Steel Community and the Asian
Development Bank. Since foreign securities are normally denominated and traded
in foreign currencies, the values of the Fund's foreign investments may be
affected favorably or unfavorably by currency exchange rates and exchange
control regulations. There may be less information publicly available about
foreign issuers than U.S. issuers, and they are not generally subject to
accounting, auditing and financial reporting standards and practices comparable
to those in the U.S. The securities of foreign issuers may be less liquid and
more volatile than the securities of comparable U.S. issuers. Foreign settlement
procedures and trade regulations may involve certain risks (such as delay in
payment or delivery of securities or in the recovery of the Fund's assets held
abroad) and expenses. It is possible that nationalization or expropriation of
assets, imposition of currency exchange controls, confiscatory taxation,
political or financial instability and diplomatic developments could affect the
value of the Fund's investments in certain foreign countries. Foreign laws may
restrict the ability to invest in certain countries or issuers and special tax
considerations will apply to foreign securities. The risks can increase if the
Fund invests in securities of issuers in emerging markets.
Money Market Instruments. The Fund may invest in cash or high-quality,
short-term money market instruments. Such instruments may include U.S.
Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Repurchase Agreements, Securities Loans and Forward Commitments. The Fund
may enter into agreements to purchase and resell securities at an agreed-upon
price and time. The Fund also has the ability to lend portfolio securities in an
amount equal to not more than 30% of its total assets to generate additional
income. These transactions must be fully collateralized at all times. The Fund
may purchase securities for delivery at a future date, which may increase its
overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date. These transactions involve
some risk to the Fund if the other party should default on its obligation and
the Fund is delayed or prevented from recovering the collateral or completing
the transaction.
Borrowings and Reverse Repurchase Agreements. The Fund may borrow money
from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Fund may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Fund enters into a reverse repurchase agreement, it
will establish a segregated account in which it will maintain liquid assets on a
daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Fund would be required to pay interest on amounts
obtained through reverse repurchase agreements, which are considered borrowings
under federal securities laws.
Stand-By Commitments. The Fund may enter into put transactions, including
transactions sometimes referred to as stand-by commitments, with respect to
securities in its portfolio. In these transactions, the Fund would acquire the
right to sell a security at an agreed upon price within a specified period prior
to its maturity date. These transactions involve some risk to the Fund if the
other party should default on its obligation and the Fund is delayed or
prevented from recovering the collateral or completing the transaction.
Acquisition of puts will have the effect of increasing the cost of the
securities subject to the put and thereby reducing the yields otherwise
available from such securities.
Zero Coupon Securities, Payment-in-Kind Obligations and Stripped
Obligations. The Fund may invest in zero coupon securities issued by
governmental and private issuers. Zero coupon securities are debt securities
that do not pay regular interest payments, and instead are sold at substantial
discounts from their value at maturity. Payment-in-kind obligations are
obligations on which the interest is payable in additional securities rather
than cash. The Fund may also invest in stripped obligations, which are
separately traded principal and interest components of an underlying obligation.
The value of these instruments tends to fluctuate more in response to changes in
interest rates than the value of ordinary interest-paying debt securities with
similar maturities. The risk is greater when the period to maturity is longer.
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<PAGE>
Floating and Variable Rate Securities; Participation Certificates. The
Fund may invest in floating rate securities, whose interest rates adjust
automatically whenever a specified interest rate changes, and variable rate
securities, whose interest rates are periodically adjusted. Certain of these
instruments permit the holder to demand payment of principal and accrued
interest upon a specified number of days' notice from either the issuer or a
third party. The securities in which the Fund may invest include participation
certificates and certificates of indebtedness or safekeeping. Participation
certificates are pro rata interests in securities held by others; certificates
of indebtedness or safekeeping are documentary receipts for such original
securities held in custody by others. As a result of the variable rate nature of
these investments, the Fund's yield may decline and it may forego the
opportunity for capital appreciation during periods when interest rates decline;
however, during periods when interest rates increase, the Fund's yield may
increase and it may have reduced risk of capital depreciation. Demand features
on certain floating or variable rate securities may obligate the Fund to pay a
"tender fee" to a third party. Demand features provided by foreign banks involve
certain risks associated with foreign investments.
Inverse Floaters and Interest Rate Caps. The Fund may invest in inverse
floaters and in securities with interest rate caps. Inverse floaters are
instruments whose interest rates bear an inverse relationship to the interest
rate on another security or the value of an index, and their price may be
considerably more volatile than a fixed-rate security. Interest rate caps are
financial instruments under which payments occur if an interest rate index
exceeds a certain predetermined interest rate level, known as the cap rate,
which is tied to a specific index. These financial products will be more
volatile in price than securities which do not include such a structure.
Mortgage-Related Securities. The Fund may invest extensively in
mortgage-related securities issued or guaranteed by certain agencies of the U.S.
Government. The Fund will not invest in principal-only or interest-only stripped
mortgage-backed securities. Mortgage pass-through securities are securities
representing interests in "pools" of mortgages in which payments of both
interest and principal on the securities are made monthly, in effect "passing
through" monthly payments made by the individual borrowers on the residential
mortgage loans which underlie the securities. Early repayment of principal on
mortgage pass-through securities held by the Fund (due to prepayments of
principal on the underlying mortgage loans) may result in a lower rate of return
when the Fund reinvests such principal. In addition, if the Fund purchased the
securities at a premium, early repayment would cause the value of the premium to
be lost. Like other fixed-income securities, when interest rates rise the value
of a mortgage-related security generally will decline; however, when interest
rates decline, the value of mortgage-related securities with prepayment features
may not increase as much as other fixed-income securities.
Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by the
U.S. Government, or by agencies or instrumentalities of the U.S. Government
(which guarantees are supported only by the discretionary authority of the U.S.
Government to purchase the agency's obligations). Mortgage pass-through
securities created by nongovernmental issuers may be supported by various forms
of insurance or guarantees.
The Fund may also invest in investment grade Collateralized Mortgage
Obligations ("CMOs"), which are hybrid instruments with characteristics of both
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal on a CMO are paid, in most cases, monthly. CMOs
may be collateralized by whole mortgage loans but are more typically
collateralized by portfolios of mortgage pass-through securities guaranteed by
the U.S. Government or its agencies or instrumentalities. CMOs are structured
into multiple classes, with each class having a different expected average life
and/or stated maturity. Monthly payments of principal, including prepayments,
are allocated to different classes in accordance with the terms of the
instruments, and changes in prepayment rates or assumptions may significantly
affect the expected average life and value of a particular class.
The Fund expects that governmental, government-related or private entities
may create other mortgage-related securities in addition to those described
above. As new types of mortgage-related securities are developed and offered to
investors, the Fund will consider making investments in such securities.
Asset-Backed Securities. The Fund may invest in asset-backed securities,
which represent a participation in, or are secured by and payable from, a stream
of payments generated by particular assets, most often a pool of
-7-
<PAGE>
assets similar to one another, such as motor vehicle receivables or credit card
receivables.
Other Investment Companies. The Fund may invest up to 10% of its total
assets in shares of other investment companies, subject to applicable regulatory
limitations.
Derivatives and Related Instruments. The Fund may invest its assets in
derivative and related instruments to hedge various market risks or to increase
the Fund's income or gain. Some of these instruments will be subject to asset
segregation requirements to cover the Fund's obligations. The Fund may (i)
purchase, write and exercise call and put options on securities and securities
indexes (including using options in combination with securities, other options
or derivative instruments); (ii) enter into swaps, futures contracts and options
on futures contracts; (iii) employ forward currency and interest rate contracts;
(iv) purchase and sell mortgage-backed and asset-backed securities; and (v)
purchase and sell structured products, which are instruments designed to
restructure or reflect the characteristics of certain other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Fund invests may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of the Fund to successfully utilize
these instruments may depend in part upon the ability of the Fund's advisers to
forecast these factors correctly. Inaccurate forecasts could expose the Fund to
a risk of loss. There can be no guarantee that there will be a correlation
between price movements in a hedging instrument and in the portfolio assets
being hedged. The Fund is not required to use any hedging strategies. Hedging
strategies, while reducing risk of loss, can also reduce the opportunity for
gain. Derivatives transactions not involving hedging may have speculative
characteristics, involve leverage and result in more risk to the Fund than
hedging strategies using the same instruments. There can be no assurance that a
liquid market will exist at a time when the Fund seeks to close out a
derivatives position. Activities of large traders in the futures and securities
markets involving arbitrage, "program trading," and other investment strategies
may cause price distortions in derivatives markets. In certain instances,
particularly those involving over-the-counter transactions or forward contracts,
there is a greater potential that a counterparty or broker may default. In the
event of a default, the Fund may experience a loss. For additional information
concerning derivatives, related instruments and the associated risks, see the
SAI.
Portfolio Turnover. The frequency of the Fund's portfolio transactions
will vary from year to year. The Fund's investment policies may lead to frequent
changes in investments, particularly in periods of rapidly changing market
conditions. High portfolio turnover rates would generally result in higher
transaction costs, including brokerage commissions or dealer mark-ups, and would
make it more difficult for the Fund to qualify as a registered investment
company under federal tax law. See "How Distributions are Made; Tax Information"
and "Other Information Concerning the Fund--Certain Regulatory Matters."
Limiting Investment Risks
Specific investment restrictions help the Fund limit investment risks for
its shareholders. These restrictions prohibit the Fund from: (a) with respect to
75% of its assets, holding more than 10% of the voting securities of any issuer
or investing more than 5% of its net assets in the securities of any one issuer
(other than U.S. Government obligations); (b) investing more than 15% of its net
assets in illiquid securities (which include securities restricted as to resale
unless they are determined to be readily marketable in accordance with
procedures established by the Board of Trustees); or (c) investing more than 25%
of its total assets in any one industry. A complete description of these and
other investment policies is included in the SAI. Except for the Fund's
investment objective, restriction (c) above and investment policies designated
as fundamental in the SAI, the Fund's investment policies are not fundamental.
The Trustees may change any non-fundamental investment policy without
shareholder approval.
Risk Factors
The Fund does not constitute a balanced or complete investment program,
and the net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities in the Fund's portfolio. The Fund is
subject to the general risks and considerations associated with the types of
investments it may make, as
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<PAGE>
described above, as well as the risks discussed herein.
The performance of the Fund depends in part on interest rate changes. As
interest rates increase, the value of the fixed income securities held by the
Fund tends to decrease. This effect will be more pronounced with respect to
investments by the Fund in mortgage-related securities, the value of which are
more sensitive to interest rate changes. There is no restriction on the maturity
of the Fund's portfolio or any individual portfolio security, and to the extent
the Fund invests in securities with longer maturities, the volatility of the
Fund in response to changes in interest rates can be expected to be greater than
if the Fund had invested in comparable securities with shorter maturities. The
performance of the Fund will also depend on the quality of its investments.
While U.S. Government securities generally are of high quality, government
securities that are not backed by the full faith and credit of the U.S. Treasury
may be affected by changes in the creditworthiness of the agency that issued
them. Guarantees of principal and interest on obligations that may be purchased
by the Fund are not guarantees of the market value of such obligations, nor do
they extend to the value of shares of the Fund. Other fixed-income securities in
which the Fund may invest, while of investment-grade quality, may be of lesser
credit quality than U.S. Government securities.
For a discussion of certain other risks associated with the Fund's
additional investment activities, see "Other Investment Practices" above.
MANAGEMENT
The Fund's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the Fund
pursuant to an Investment Advisory Agreement and has overall responsibility for
investment decisions of the Fund, subject to the oversight of the Board of
Trustees. Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation,
a bank holding company. Chase and its predecessors have over 100 years of money
management experience. For its investment advisory services to the Fund, Chase
is entitled to receive an annual fee computed daily and paid monthly based at an
annual rate equal to 0.30% of the Fund's average daily net assets. Chase is
located at 270 Park Avenue, New York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Fund pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly-owned operating subsidiary of
Chase. CAM makes investment decisions for the Fund on a day-to-day basis. For
these services, CAM is entitled to receive a fee, payable by Chase from its
advisory fee, at an annual rate equal to 0.15% of the Fund's average daily net
assets. CAM was recently formed for the purpose of providing discretionary
investment advisory services to institutional clients and to consolidate Chase's
investment management function. The same individuals who serve as portfolio
managers for Chase also serve as portfolio managers for CAM. CAM is located at
1211 Avenue of the Americas, New York, New York 10036.
Portfolio Manager. John Schmucker, Vice President of Chase, has been
responsible for the day-to-day management of the Fund's portfolio since its
inception and, prior to that, was responsible for the day-to-day management of
The Hanover U.S. Government Securities Fund, the Fund's predecessor. Mr.
Schmucker joined Chase in May l996. Prior to joining Chase, Mr. Schmucker was a
vice president and portfolio manager at The Portfolio Group Inc. Prior to
joining The Portfolio Group Inc. in 1992, Mr. Schmucker was the Chief Investment
Officer of Chemical Bank's Official Institutions Group. Previously, he was a
portfolio manager with Henry Kaufman & Company, Inc.
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HOW TO BUY, SELL AND EXCHANGE SHARES
How to Buy Shares
You can open a Fund account with as little as $2,500 ($1,000 for IRAs,
SEP-IRAs and the Systematic Investment Plan) and make additional investments at
any time with as little as $100. You can buy Fund shares three ways--through an
investment representative, through the Fund's distributor by calling the Vista
Service Center, or through the Systematic Investment Plan.
All purchases made by check should be in U.S. dollars and made payable to
the Vista Funds. Third party checks, credit cards and cash will not be accepted.
The Fund reserves the right to reject any purchase order or cease offering
shares for purchase at any time. When purchases are made by check, redemptions
will not be allowed until clearance of the purchase check, which may take 15
calendar days or longer. In addition, the redemption of shares purchased through
ACH will not be allowed until clearance of your payment which may take 7
business days or longer.
Buying shares through the Fund's distributor. Complete and return the
enclosed application and your check in the amount you wish to invest to the
Vista Service Center.
Buying shares through systematic investing. You can make regular
investments of $100 or more per transaction through automatic periodic deduction
from your bank checking or savings account. Shareholders electing to start this
Systematic Investment Plan when opening an account should complete Section 8 of
the account application. Current shareholders may begin such a plan at any time
by sending a signed letter with signature guarantee and a deposit slip or voided
check to the Vista Service Center. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Shares are sold at the public offering price based on the net asset value
next determined after the Vista Service Center receives your order in proper
form. In most cases, in order to receive that day's public offering price, the
Vista Service Center must receive your order before the close of regular trading
on the New York Stock Exchange. If you buy shares through your investment
representative, the representative must receive your order before the close of
regular trading on the New York Stock Exchange to receive that day's public
offering price. Orders for shares are accepted by the Fund after funds are
converted to federal funds. Orders paid by check and received by 2:00 p.m.,
Eastern Time will generally be available for the purchase of shares the
following business day.
If you are considering redeeming or exchanging shares or transferring
shares to another person shortly after purchase, you should pay for those shares
with a certified check to avoid any delay in redemption, exchange or transfer.
Otherwise the Fund may delay payment until the purchase price of those shares
has been collected or, if you redeem by telephone, until 15 calendar days after
the purchase date. To eliminate the need for safekeeping, the Fund will not
issue certificates for your shares unless you request them.
Offering Price
The public offering price of Class A shares is the net asset value plus a
sales charge that varies depending on the size of your purchase. The Fund
receives the net asset value. The sales charge is allocated between your
broker-dealer and the Fund's distributor as shown in the following table,
except when the Fund's distributor, in its discretion, allocates the entire
amount to your broker-dealer.
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- -------------------------------------------------------------------------------
Sales charge as a
percentage of: Amount of sales charge
Amount of transaction at Offering Net amount reallowed to dealers as a
offering price($) price invested percentage of offering price
- -------------------------------------------------------------------------------
Under 100,000 4.50 4.71 4.00
- -------------------------------------------------------------------------------
100,000 but under 250,000 3.75 3.90 3.25
- -------------------------------------------------------------------------------
250,000 but under 500,000 2.5 2.56 2.25
- -------------------------------------------------------------------------------
500,000 but under 1,000,000 2.00 2.04 1.75
- -------------------------------------------------------------------------------
There is no initial sales charge on purchases of Class A shares of $1
million or more.
The Fund's distributor pays broker-dealers commissions on net sales of
Class A shares of $1 million or more based on an investor's cumulative
purchases. Such commissions are paid at the rate of 0.75% of the amount under
$2.5 million, 0.50% of the next $7.5 million, 0.25% of the next $40 million and
0.15% thereafter. The Fund's distributor may withhold such payments with respect
to short-term investments.
General
You may be eligible to buy Class A shares at reduced sales charges. Consult
your investment representative or the Vista Service Center for details about
Vista's combined purchase privilege, cumulative quantity discount, statement of
intention, group sales plan, employee benefit plans, and other plans.
Descriptions are also included in the enclosed application and in the SAI. In
addition, sales charges will not apply to shares purchased with redemption
proceeds received within the prior ninety days from non-Vista mutual funds on
which the investor paid a front-end or contingent deferred sales charge.
A participant-directed employee benefit plan participating in a
"multi-fund" program approved by the Board of Trustees may include amounts
invested in the other mutual funds participating in such program for purposes of
determining whether the plan may purchase Class A shares at net asset value.
These investments will also be included for purposes of the discount privileges
and programs described above.
The Fund may sell Class A shares at net asset value without an initial
sales charge to the current and retired Trustees (and their families), current
and retired employees (and their families) of Chase, the Fund's distributor and
transfer agent or any affiliates or subsidiaries thereof, registered
representatives and other employees (and their families) of broker-dealers
having selected dealer agreements with the Fund's distributor, employees (and
their families) of financial institutions having selected dealer agreements with
the Fund's distributor (or otherwise having an arrangement with a broker-dealer
or financial institution with respect to sales of Vista fund shares) financial
institution trust departments investing an aggregate of $1 million or more in
the Vista Family of Funds and clients of certain administrators of tax-qualified
plans when proceeds from repayments of loans to participants are invested (or
reinvested) in the Vista Family of Funds.
No initial sales charge will apply to the purchase of Class A shares of
the Fund by an investor seeking to invest the proceeds of a qualified retirement
plan where a portion of the plan was invested in the Vista Family of
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Funds, any qualified retirement plan with 50 or more participants, or an
individual participant in a tax-qualified plan making a tax-free rollover or
transfer of assets from the plan in which Chase or an affiliate serves as
trustee or custodian of the plan or manages some portion of the plan's assets.
Purchases of Class A shares of the Fund may be made with no initial sales
charge through an investment adviser or financial planner that charges a fee for
its services. Purchases of Class A shares of the Fund may be made with no
initial sales charge (i) by an investment adviser, broker or financial planner,
provided arrangements are preapproved and purchases are placed through an
omnibus account with the Fund or (ii) by clients of such investment adviser or
financial planner who place trades for their own accounts, if such accounts are
linked to a master account of such investment adviser or financial planner on
the books and records of the broker or agent. Such purchases may be made for
retirement and deferred compensation plans and trusts used to fund those plans.
Purchases of Class A shares of the fund may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary, provided that appropriate notification of such
fiduciary relationship is reported at the time of the investment to the Fund,
the Fund's distributor or the Vista Service Center.
Shareholders of record of any Vista Fund as of November 30, 1990 and
certain immediate family members may purchase Class A shares of the Fund with no
initial sales charge for as long as they continue to own Class A shares of any
Vista fund, provided there is no change in account registration. Shareholders of
record of any portfolio of The Hanover Funds, Inc. or The Hanover Investment
Funds, Inc. as of May 3, 1996 and certain related investors may purchase Class A
shares of the Fund with no initial sales charge for as long as they continue to
own shares of any Vista fund following this date, provided there is no change in
account registration.
The Fund may sell Class A shares at net asset value without an initial
sales charge in connection with the acquisition by the Fund of assets of an
investment company or personal holding company.
The Fund reserves the right to change any of these policies on purchases
without an initial sales charge at any time and may reject any such purchase
request.
Shareholders of other Vista funds may be entitled to exchange their shares
for, or reinvest distributions from their funds in, shares of the Fund at net
asset value.
How to Sell Shares
You can sell your shares to the Fund any day the New York Stock Exchange is
open, either directly to the Fund or through your investment representative. The
Fund will only forward redemption payments on shares for which it has collected
payment of the purchase price.
Selling shares directly to the Fund. Send a signed letter of instruction
to the Vista Service Center, along with any certificates that represent shares
you want to sell. The price you will receive is the next net asset value
calculated after the Fund receives your request in proper form. In order to
receive that day's net asset value, the Vista Service Center must receive your
request before the close of regular trading on the New York Stock Exchange.
If you sell shares having a net asset value of $100,000 or more, the
signatures of registered owners or their legal representatives must be
guaranteed by a bank, broker-dealer or certain other financial institutions. See
the SAI for more information about where to obtain a signature guarantee.
If you want your redemption proceeds sent to an address other than your
address as it appears on Vista's
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records, a signature guarantee is required. The Fund may require additional
documentation for the sale of shares by a corporation, partnership, agent or
fiduciary, or a surviving joint owner. Contact the Vista Service Center for
details.
The Fund generally sends you payment for your shares the business day after
your request is received, assuming the Fund has collected payment of the
purchase price of your shares. Under unusual circumstances, the Fund may suspend
redemptions, or postpone payment for more than seven days, as permitted by
federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request, as described above,
or contact your investment representative. The Telephone Redemption Privilege is
not available if you were issued certificates for shares that remain
outstanding. The Telephone Redemption Privilege may be modified or terminated
without notice.
Systematic withdrawal. You can make regular withdrawals of $50 or more
monthly, quarterly or semiannually. A minimum account balance of $5,000 is
required to establish a systematic withdrawal plan. Call the Vista Service
Center at 1-800-34-VISTA for complete instructions.
Selling shares through your investment representative. Your investment
representative must receive your request before the close of regular trading on
the New York Stock Exchange to receive that day's net asset value. Your
investment representative will be responsible for furnishing all necessary
documentation to the Vista Service Center, and may charge you for its services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $500 or if you purchase through the Systematic Investment
Plan and fail to meet the Fund's investment minimum within a twelve month
period. In the event of any such redemption, you will receive at least 60 days
notice prior to the redemption.
How to Exchange Your Shares
You can exchange your shares for shares of the same class of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer all classes of shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully and retained for
future reference.
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all
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<PAGE>
states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the amount or
number of exchanges or reject any exchange. In addition, any shareholder who
makes more than ten exchanges of shares involving the Fund in a year or three in
a calendar quarter will be charged a $5.00 administration fee for each such
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult the Vista Service Center before requesting an exchange.
See the SAI to find out more about the exchange privilege.
Reinstatement privilege. Class A shareholders have a one time privilege of
reinstating their investment in the Fund at net asset value next determined
subject to written request within 90 calendar days of the redemption,
accompanied by payment for the shares (not in excess of the redemption).
HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each business day of the Fund, by
dividing the net assets of the Fund attributable to that class by the total
number of outstanding shares of that class. Values of assets held by the Fund
are determined on the basis of their market or other fair value, as described in
the SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund declares dividends daily and distributes any net investment
income at least monthly. The Fund distributes any net realized capital gains at
least annually. Distributions from capital gains are made after applying any
available capital loss carryover.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares without a sales charge; (2) receive
distributions from net investment income in cash or by ACH to a pre-established
bank account while reinvesting capital gains distributions in additional shares
without a sales charge; or (3) receive all distributions in cash or by ACH. You
can change your distribution option by notifying the Vista Service Center in
writing. If you do not select an option when you open your account, all
distributions will be reinvested. All distributions not paid in cash or by ACH
will be reinvested in shares of the class on which the distributions are paid.
You will receive a statement confirming reinvestment of distributions in
additional Fund shares promptly following the quarter in which the reinvestment
occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-
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<PAGE>
term capital gains will be taxable as such, regardless of how long you have held
the shares. Distributions will be taxable as described above whether received in
cash or in shares through the reinvestment of distributions.
Distributions may also be subject to state and local taxes. However, the
laws of most states and localities except from some types of taxes distributions
such as those made by the Fund to the extent such distributions are attributable
to interest from obligations of the U.S. Government and certain of its agencies
and instrumentalities.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Distribution Plans
The Fund's distributor is Vista Fund Distributors, Inc. ("VFD"). VFD is a
subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase. The Trust
has adopted a Rule 12b-1 distribution plan which provides that the Fund will pay
distribution fees at annual rates of up to 0.25% of the average daily net assets
attributable to Class A shares of the Fund. Payments under the distribution
plans shall be used to compensate or reimburse the Fund's distributor and
broker-dealers for services provided and expenses incurred in connection with
the sale of Class A shares, and are not tied to the amount of actual expenses
incurred. Payments may be used to compensate broker-dealers with trail or
maintenance commissions at an annual rate of up to 0.25% of the average daily
net asset value of Class A shares maintained in the Fund by customers of these
broker-dealers. Trail or maintenance commissions are paid to broker-dealers
beginning the 13th month following the purchase of shares by their customers.
Some activities intended to promote the sale of Class A shares will be conducted
generally by the Vista Family of Funds, and activities intended to promote the
Fund's Class A shares may also benefit the Fund's other shares and other Vista
funds.
VFD may provide promotional incentives to broker-dealers that meet
specified sales targets for one or more Vista funds. These incentives may
include gifts of up to $100 per person annually; an occasional meal, ticket to a
sporting event or theater or entertainment for broker-dealers and their guests;
and payment or reimbursement for travel expenses, including lodging and meals,
in connection with attendance at training and educational meetings within and
outside the U.S.
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Class A shares of the Fund. These services
include assisting with purchase and redemption transactions, maintaining
shareholder accounts and records, furnishing customer statements, transmitting
shareholder reports and communications to customers and other similar
shareholder liaison services. For performing these services, each shareholder
servicing agent receives an annual fee of up to 0.25% of the
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average daily net assets of Class A shares of the Fund held by investors for
whom the shareholder servicing agent maintains a servicing relationship.
Shareholder servicing agents may subcontract with other parties for the
provision of shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator and Sub-Administrator
Chase acts as administrator of the Fund and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets.
VFD provides certain sub-administrative services to the Fund pursuant to
a distribution and sub-administration agreement and is entitled to receive a
fee for these services from the Fund at an annual rate equal to 0.05% of the
Fund's average daily net assets. VFD has agreed to use a portion of this fee to
pay for certain expenses incurred in connection with organizing new series of
the Trust and certain other ongoing expenses of the Trust. VFD is located at
101 Park Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Shareholder servicing and
distribution fees are allocated to specific classes of the Fund. In addition,
the Fund may allocate transfer agency and certain other expenses by class.
Service providers to the Fund may, from time to time, voluntarily waive all or a
portion of any fees to which they are entitled.
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Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Shares have no
preemptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of the Fund generally vote
together except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class.
The Fund issues multiple classes of shares. This Prospectus relates only
to Class A shares of the Fund. The Fund offers other classes of shares in
addition to this class. The categories of investors that are eligible to
purchase shares and minimum investment requirements may differ for each class of
Fund shares. In addition, other classes of Fund shares may be subject to
differences in sales charge arrangements, ongoing distribution and service fee
levels, and levels of certain other expenses, which will affect the relative
performance of the different classes. Investors may call 1-800-34-VISTA to
obtain additional information about other classes of shares of the Fund that are
offered. Any person entitled to receive compensation for selling or servicing
shares of the Fund may receive different levels of compensation with respect to
one class of shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates
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may sell U.S. Government obligations and municipal obligations to, and purchase
them from, other investment companies sponsored by the Fund's distributor or
affiliates of the distributor. Chase will not invest the Fund's assets in any
U.S. Government obligations, municipal obligations or commercial paper purchased
from itself or any affiliate, although under certain circumstances such
securities may be purchased from other members of an underwriting syndicate in
which Chase or an affiliate is a non-principal member. This restriction may
limit the amount or type of U.S. Government obligations, municipal obligations
or commercial paper available to be purchased by the Fund. Chase has informed
the Fund that in making its investment decisions, it does not obtain or use
material inside information in the possession of any other division or
department of Chase, including the division that performs services for the Fund
as custodian, or in the possession of any affiliate of Chase. Shareholders of
the Fund should be aware that, subject to applicable legal or regulatory
restrictions, Chase and its affiliates may exchange among themselves certain
information about the shareholder and his account. Transactions with affiliated
broker-dealers will only be executed on an agency basis in accordance with
applicable federal regulations.
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income calculated pursuant to federal rules per share
during a recent 30-day period by the maximum public offering price per share of
such class on the last day of that period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the maximum public offering price and reflects the deduction of the
maximum initial sales charge. Total return may also be presented for other
periods or without reflecting sales charges. Any quotation of investment
performance not reflecting the maximum initial sales charge or contingent
deferred sales charge would be reduced if such sales charges were used.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses. Investment performance also
often reflects the risks associated with the Fund's investment objectives and
policies. These factors should be considered when comparing the Fund's
investment results to those of other mutual funds and other investment vehicles.
Quotation of investment performance for any period when a fee waiver or expense
limitation was in effect will be greater than if the waiver or limitation had
not been in effect. The Fund's performance may be compared to other mutual
funds, relevant indices and rankings prepared by independent services. See the
SAI.
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MAKE THE MOST OF YOUR VISTA PRIVILEGES
The following services are available to you as a Vista mutual fund shareholder.
o SYSTEMATIC INVESTMENT PLAN - Invest as much as you wish ($100 or more) in
the first or third week of any month. The amount will be automatically
transferred from your checking or savings account.
o SYSTEMATIC WITHDRAWAL - Make regular withdrawals of $50 or more monthly,
quarterly or semiannually. A minimum account balance of $5,000 is required
to establish a systematic withdrawal plan.
o SYSTEMATIC EXCHANGE - Transfer assets automatically from one Vista account
to another on a regular, prearranged basis. There is no additional charge
for this service.
o FREE EXCHANGE PRIVILEGE - Exchange money between Vista funds in the same
class of shares without charge. The exchange privilege allows you to
adjust your investments as your objectives change.
Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange and systematic withdrawal or exchange.
o REINSTATEMENT PRIVILEGE - Class A shareholders have a one time privilege
of reinstating their investment in the Fund at net asset value next
determined subject to written request within 90 calendar days of the
redemption, accompanied by payment for the shares (not in excess of the
redemption).
For more information about any of these services and privileges, call your
shareholder servicing agent, investment representative or the Vista Service
Center at 1-800-34-VISTA. These privileges are subject to change or termination.
-19-
<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
-20-
<PAGE>
PROSPECTUS
VISTA[SM] U.S. GOVERNMENT SECURITIES FUND
Institutional Shares
May 6, 1996
Investment Strategy: Total Return
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Fund in its May 6, 1996 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Vista Service Center at 1-800-622-4273. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY
OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary........................................................
Financial Highlights...................................................
Fund Objective.........................................................
Investment Policies....................................................
Management.............................................................
How to Purchase, Redeem and Exchange Shares............................
How the Fund Values its Shares.........................................
How Distributions are Made; Tax Information............................
Other Information Concerning the Fund..................................
Performance Information................................................
-2-
<PAGE>
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in the Institutional Shares
Fund based on estimated expenses for the current fiscal year. The examples show
the cumulative expenses attributable to a hypothetical $1,000 investment over
specified periods.
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee.............................................. 0.30%
12b-1 Fee............................................................ None
Shareholder Servicing Fee (after estimated waiver)(*)................ 0.20%
Other Expenses....................................................... 0.35%
-----
Total Fund Operating Expenses (after waiver of fee)(*)............... 0.85%
=====
Example
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Years
------ -------
Institutional Shares ............ $ 9 $ 27
- -----------------------
* Reflects current waiver arrangement to maintain Total Fund Operating
Expenses at the level indicated in the table above. Absent such waiver,
the Shareholder Servicing Fee would be 0.25% and Total Fund Operating
Expenses would be 0.90%. Chase has agreed voluntarily to waive fees
payable to it and/or reimburse expenses for a period of at least one year
to the extent necessary to prevent Total Fund Operating Expenses of
Institutional Shares of the Fund for such period from exceeding the amount
indicated in the table.
The table is provided to help you understand the expenses of investing in
the Fund and your share of the operating expenses that the Fund incurs. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those accounts.
See "Other Information Concerning the Fund."
-3-
<PAGE>
FINANCIAL HIGHLIGHTS
On May 3, 1996, The Hanover U.S. Government Securities Fund (the
"Predecessor Fund") merged into Vista U.S. Government Securities Fund, which was
created to be the successor to the Predecessor Fund. The table set forth below
provides selected per share data and ratios for one Investor Share of the
Predecessor Fund for each period shown. This information is supplemented by
financial statements and accompanying notes appearing in the Predecessor Fund's
Annual Report to Shareholders for the fiscal year ended November 30, 1995, which
is incorporated by reference into the SAI. The financial statements and notes,
as well as the financial information set forth in the table below, unless
otherwise indicated, have been audited by KPMG Peat Marwick LLP independent
accountants whose report thereon is also included in the Annual Report to
Shareholders. Shareholders can obtain a copy of this Annual Report by contacting
the Fund or their Shareholder Servicing Agent.
Vista U.S. Government Securities Fund
<TABLE>
<CAPTION>
Years ended Period Ended
November 30, November 30,
1995 1994 1993* 1995**
---- ---- ---- -------------
Investor Shares Advisor Share
<S> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period $9.23 $10.27 $10.00 $9.59
Income From Investment Operations
Net Investment Income 0.56 0.50 0.34 0.30
Net gain (loss) on securities
(both realized and unrealized) 0.95 (0.94) 0.27 0.61
---- ------ ---- ----
Total from Investment Operations 1.51 (0.44) 0.61 0.91
---- ------ ---- ----
Less Distributions:
Dividends from net investment
income (0.56) (0.50) (0.34) (0.32)
Distributions from capital gains -- (0.10) -- --
----- ------ ----- -----
Total Distributions (0.56) (0.60) (0.34) (0.32)
----- ------ ----- -----
Net Asset Value, End of Period $10.18 $9.23 $10.27 $10.18
====== ====== ====== ======
Total Return*** 16.82% (4.41%) 6.16% 9.57%
Ratios/Supplemental Data
Net Assets, End of Period
(000 omitted) $83,304 $83,649 $86,089 $28
Ratio of Expenses to Average
Net Assets # 0.85% 0.85% 0.85% 0.83%
Ratio of Net Investment Income to
Average Net Assets # 5.78% 5.15% 4.26% 5.43%
Ratio of expenses without waivers and
assumption of expenses to
Average Net Assets # 1.11% 1.04% 1.04% 6.65%
Ratio of net investment income without
waivers and assumption of expenses
to Average Net Assets(unaudited) # 5.52% 4.96% 4.07% (0.39%)
Portfolio Turnover Rate 220.12% 134.29% 37.45% 220.12%
</TABLE>
- -----------------------------
# Short periods have been annualized.
* Fund commenced operations on February 19, 1993.
** Sales of Advisor Shares began on May 3, 1995.
*** Total return figures do not include the effect of any sales load.
-4-
<PAGE>
FUND OBJECTIVE
Vista U.S. Government Securities Fund seeks as high a level of total
return as is consistent with the preservation of capital. Total return consists
of income and capital appreciation. The Fund is not intended to be a complete
investment program, and there is no assurance it will achieve its objective.
INVESTMENT POLICIES
Investment Approach
Under normal market conditions, the Fund will invest at least 65% of its
total assets in securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, and related repurchase agreements. There is no
restriction on the maturity of the Fund's portfolio or any individual portfolio
security, and the Fund's advisers are free to take advantage of the entire range
of maturities of securities eligible for the Fund's portfolio. The Fund may
invest extensively in mortgage-backed securities issued or guaranteed by certain
agencies of the U.S. Government, as described below.
The Fund's advisers may adjust the average maturity of the Fund's
portfolio based upon their assessment of the relative yields available on
securities of different maturities and their expectations of future changes in
interest rates. Since the Fund invests extensively in U.S. Government
securities, certain of which have less credit risk than that associated with
other securities, the level of income achieved by the Fund may not be as high as
that of other funds which invest in lower quality securities.
The Fund may invest the portion of its assets not invested in U.S.
Government securities and related repurchase agreements in nonconvertible
corporate debt securities of domestic and foreign issuers, such as bonds and
debentures. These securities must be rated, at the time of investment, at least
in the category A or the equivalent by Moody's Investors Service, Inc., or
Standard & Poor's Corporation, or Fitch Investor's Service Inc., or another
national rating organization, or if unrated, of comparable quality as determined
by the Fund's advisers.
The Fund may invest any portion of its assets not invested as described
above in high quality money market instruments and repurchase agreements. For
temporary defensive purposes, the Fund may invest without limitation in these
instruments. To the extent that the Fund departs from its investment policies
during temporary defensive periods, its investment objective may not be
achieved.
The Fund is classified as a "diversified" fund under federal securities
law.
In lieu of investing directly, the Fund is authorized to seek to achieve
its objective by investing all of its investable assets in an investment company
having substantially the same investment objective and policies as the Fund.
Other Investment Practices
The Fund may also engage in the following investment practices, when
consistent with the Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI.
U.S. Government Securities. The Fund may invest in U.S. Treasury
obligations, which are bills, notes and bonds backed by the full faith and
credit of the U.S. Government as to payment of principal and interest which
generally differ only in their interest rates and maturities. The Fund also may
invest in securities issued or guaranteed by U.S. Government agencies and
instrumentalities, including obligations that are supported by the full faith
and credit of the U.S. Treasury, the limited authority of the issuer or
guarantor to borrow from the U.S. Treasury, or only the credit of the issuer or
guarantor. In the case of obligations not backed by the full faith and credit of
the U.S. Treasury, the agency issuing or guaranteeing the obligation is
principally responsible for ultimate repayment.
Foreign Securities. The Fund may invest in foreign obligations issued or
guaranteed by foreign governments and supranational entities, and in
non-convertible corporate debt securities of foreign issuers.
-5-
<PAGE>
Supranational entities include organizations such as The World Bank, the
European Community, the European Coal and Steel Community and the Asian
Development Bank. Since foreign securities are normally denominated and traded
in foreign currencies, the values of the Fund's foreign investments may be
affected favorably or unfavorably by currency exchange rates and exchange
control regulations. There may be less information publicly available about
foreign issuers than U.S. issuers, and they are not generally subject to
accounting, auditing and financial reporting standards and practices comparable
to those in the U.S. The securities of foreign issuers may be less liquid and
more volatile than the securities of comparable U.S. issuers. Foreign settlement
procedures and trade regulations may involve certain risks (such as delay in
payment or delivery of securities or in the recovery of the Fund's assets held
abroad) and expenses. It is possible that nationalization or expropriation of
assets, imposition of currency exchange controls, confiscatory taxation,
political or financial instability and diplomatic developments could affect the
value of the Fund's investments in certain foreign countries. Foreign laws may
restrict the ability to invest in certain countries or issuers and special tax
considerations will apply to foreign securities. The risks can increase if the
Fund invests in securities of issuers in emerging markets.
Money Market Instruments. The Fund may invest in cash or high-quality,
short-term money market instruments. Such instruments may include U.S.
Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Repurchase Agreements, Securities Loans and Forward Commitments. The Fund
may enter into agreements to purchase and resell securities at an agreed-upon
price and time. The Fund also has the ability to lend portfolio securities in an
amount equal to not more than 30% of its total assets to generate additional
income. These transactions must be fully collateralized at all times. The Fund
may purchase securities for delivery at a future date, which may increase its
overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date. These transactions involve
some risk to the Fund if the other party should default on its obligation and
the Fund is delayed or prevented from recovering the collateral or completing
the transaction.
Borrowings and Reverse Repurchase Agreements. The Fund may borrow money
from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Fund may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever the Fund enters into a reverse repurchase agreement, it
will establish a segregated account in which it will maintain liquid assets on a
daily basis in an amount at least equal to the repurchase price (including
accrued interest). The Fund would be required to pay interest on amounts
obtained through reverse repurchase agreements, which are considered borrowings
under federal securities laws.
Stand-By Commitments. The Fund may enter into put transactions, including
transactions sometimes referred to as stand-by commitments, with respect to
securities in its portfolio. In these transactions, the Fund would acquire the
right to sell a security at an agreed upon price within a specified period prior
to its maturity date. These transactions involve some risk to the Fund if the
other party should default on its obligation and the Fund is delayed or
prevented from recovering the collateral or completing the transaction.
Acquisition of puts will have the effect of increasing the cost of the
securities subject to the put and thereby reducing the yields otherwise
available from such securities.
Zero Coupon Securities, Payment-in-Kind Obligations and Stripped
Obligations. The Fund may invest in zero coupon securities issued by
governmental and private issuers. Zero coupon securities are debt securities
that do not pay regular interest payments, and instead are sold at substantial
discounts from their value at maturity. Payment-in-kind obligations are
obligations on which the interest is payable in additional securities rather
than cash. The Fund may also invest in stripped obligations, which are
separately traded principal and interest components of an underlying obligation.
The value of these instruments tends to fluctuate more in response to changes in
interest rates than the value of ordinary interest-paying debt securities with
similar maturities. The risk is greater when the period to maturity is longer.
-6-
<PAGE>
Floating and Variable Rate Securities; Participation Certificates. The
Fund may invest in floating rate securities, whose interest rates adjust
automatically whenever a specified interest rate changes, and variable rate
securities, whose interest rates are periodically adjusted. Certain of these
instruments permit the holder to demand payment of principal and accrued
interest upon a specified number of days' notice from either the issuer or a
third party. The securities in which the Fund may invest include participation
certificates and certificates of indebtedness or safekeeping. Participation
certificates are pro rata interests in securities held by others; certificates
of indebtedness or safekeeping are documentary receipts for such original
securities held in custody by others. As a result of the variable rate nature of
these investments, the Fund's yield may decline and it may forego the
opportunity for capital appreciation during periods when interest rates decline;
however, during periods when interest rates increase, the Fund's yield may
increase and it may have reduced risk of capital depreciation. Demand features
on certain floating or variable rate securities may obligate the Fund to pay a
"tender fee" to a third party. Demand features provided by foreign banks involve
certain risks associated with foreign investments.
Inverse Floaters and Interest Rate Caps. The Fund may invest in inverse
floaters and in securities with interest rate caps. Inverse floaters are
instruments whose interest rates bear an inverse relationship to the interest
rate on another security or the value of an index, and their price may be
considerably more volatile than a fixed-rate security. Interest rate caps are
financial instruments under which payments occur if an interest rate index
exceeds a certain predetermined interest rate level, know as the cap rate, which
is tied to a specific index. These financial products will be more volatile in
price than securities which do not include such a structure.
Mortgage-Related Securities. The Fund may invest extensively in
mortgage-related securities issued or guaranteed by certain agencies of the U.S.
Government. The Fund will not invest in principal-only or interest-only stripped
mortgage-backed securities. Mortgage pass-through securities are securities
representing interests in "pools" of mortgages in which payments of both
interest and principal on the securities are made monthly, in effect "passing
through" monthly payments made by the individual borrowers on the residential
mortgage loans which underlie the securities. Early repayment of principal on
mortgage pass-through securities held by the Fund (due to prepayments of
principal on the underlying mortgage loans) may result in a lower rate of return
when the Fund reinvests such principal. In addition, if the Fund purchased the
securities at a premium, early repayment would cause the value of the premium to
be lost. Like other fixed-income securities, when interest rates rise the value
of a mortgage-related security generally will decline; however, when interest
rates decline, the value of mortgage-related securities with prepayment features
may not increase as much as other fixed-income securities.
Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by the
U.S. Government, or by agencies or instrumentalities of the U.S. Government
(which guarantees are supported only by the discretionary authority of the U.S.
Government to purchase the agency's obligations). Mortgage pass-through
securities created by nongovernmental issuers may be supported by various forms
of insurance or guarantees.
The Fund may also invest in investment grade Collateralized Mortgage
Obligations ("CMOs"), which are hybrid instruments with characteristics of both
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal on a CMO are paid, in most cases, monthly. CMOs
may be collateralized by whole mortgage loans but are more typically
collateralized by portfolios of mortgage pass-through securities guaranteed by
the U.S. Government or its agencies or instrumentalities. CMOs are structured
into multiple classes, with each class having a different expected average life
and/or stated maturity. Monthly payments of principal, including prepayments,
are allocated to different classes in accordance with the terms of the
instruments, and changes in prepayment rates or assumptions may significantly
affect the expected average life and value of a particular class.
The Fund expects that governmental, government-related or private entities
may create other mortgage-related securities in addition to those described
above. As new types of mortgage-related securities are developed and offered to
investors, the Fund will consider making investments in such securities.
-7-
<PAGE>
Asset-Backed Securities. The Fund may invest in asset-backed securities,
which represent a participation in, or are secured by and payable from, a stream
of payments generated by particular assets, most often a pool of assets similar
to one another, such as motor vehicle receivables or credit card receivables.
Other Investment Companies. The Fund may invest up to 10% of its total
assets in shares of other investment companies, subject to applicable regulatory
limitations.
Derivatives and Related Instruments. The Fund may invest its assets in
derivative and related instruments to hedge various market risks or to increase
the Fund's income or gain. Some of these instruments will be subject to asset
segregation requirements to cover the Fund's obligations. The Fund may (i)
purchase, write and exercise call and put options on securities and securities
indexes (including using options in combination with securities, other options
or derivative instruments); (ii) enter into swaps, futures contracts and options
on futures contracts; (iii) employ forward currency and interest rate contracts;
(iv) purchase and sell mortgage-backed and asset-backed securities; and (v)
purchase and sell structured products, which are instruments designed to
restructure or reflect the characteristics of certain other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which the
Fund invests may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of the Fund to successfully utilize
these instruments may depend in part upon the ability of the Fund's advisers to
forecast these factors correctly. Inaccurate forecasts could expose the Fund to
a risk of loss. There can be no guarantee that there will be a correlation
between price movements in a hedging instrument and in the portfolio assets
being hedged. The Fund is not required to use any hedging strategies. Hedging
strategies, while reducing risk of loss, can also reduce the opportunity for
gain. Derivatives transactions not involving hedging may have speculative
characteristics, involve leverage and result in more risk to the Fund than
hedging strategies using the same instruments. There can be no assurance that a
liquid market will exist at a time when the Fund seeks to close out a
derivatives position. Activities of large traders in the futures and securities
markets involving arbitrage, "program trading," and other investment strategies
may cause price distortions in derivatives markets. In certain instances,
particularly those involving over-the-counter transactions or forward contracts,
there is a greater potential that a counterparty or broker may default. In the
event of a default, the Fund may experience a loss. For additional information
concerning derivatives, related instruments and the associated risks, see the
SAI.
Portfolio Turnover. The frequency of the Fund's portfolio transactions
will vary from year to year. The Fund's investment policies may lead to frequent
changes in investments, particularly in periods of rapidly changing market
conditions. High portoflio turnover rates would generally result in higher
transaction costs, including brokerage commissions or dealer mark-ups, and would
make it more difficult for the Fund to qualify as a registered investment
company under federal tax law. See "How Distributions are Made; Tax Information"
and "Other Information Concerning the Fund--Certain Regulatory Matters."
Limiting Investment Risks
Specific investment restrictions help the Fund limit investment risks for
its shareholders. These restrictions prohibit the Fund from: (a) with respect to
75% of its total assets, holding more than 10% of the voting securities of any
issuer or investing more than 5% of its total assets in the securities of any
one issuer (other than U.S. Government obligations); (b) investing more than 15%
of its net assets in illiquid securities (which include securities restricted as
to resale unless they are determined to be readily marketable in accordance with
procedures established by the Board of Trustees); or (c) investing more than 25%
of its total assets in any one industry. A complete description of these and
other investment policies is included in the SAI. Except for the Fund's
investment objective, restriction (c) above and investment policies designated
as fundamental in the SAI, the Fund's investment policies are not fundamental.
The Trustees may change any non-fundamental investment policy without
shareholder approval.
Risk Factors
-8-
<PAGE>
The Fund does not constitute a balanced or complete investment program,
and the net asset value of the shares of the Fund can be expected to fluctuate
based on the value of the securities in the Fund's portfolio. The Fund is
subject to the general risks and considerations associated with the types of
investments it may make, as described above, as well as the risks discussed
herein.
The performance of the Fund depends in part on interest rate changes. As
interest rates increase, the value of the fixed income securities held by the
Fund tends to decrease. This effect will be more pronounced with respect to
investments by the Fund in mortgage-related securities, the value of which are
more sensitive to interest rate changes. There is no restriction on the maturity
of the Fund's portfolio or any individual portfolio security, and to the extent
the Fund invests in securities with longer maturities, the volatility of the
Fund in response to changes in interest rates can be expected to be greater than
if the Fund had invested in comparable securities with shorter maturities. The
performance of the Fund will also depend on the quality of its investments.
While U.S. Government securities generally are of high quality, government
securities that are not backed by the full faith and credit of the U.S. Treasury
may be affected by changes in the creditworthiness of the agency that issued
them. Guarantees of principal and interest on obligations that may be purchased
by the Fund are not guarantees of the market value of such obligations, nor do
they extend to the value of shares of the Fund. Other fixed-income securities in
which the Fund may invest, while of investment-grade quality, may be of lesser
credit quality than U.S. Government securities.
For a discussion of certain other risks associated with the Fund's
additional investment activities, see "Other Investment Practices" above.
MANAGEMENT
The Fund's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the Fund
pursuant to an Investment Advisory Agreement and has overall responsibility for
investment decisions of the Fund, subject to the oversight of the Board of
Trustees. Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation,
a bank holding company. Chase and its predecessors have over 100 years of money
management experience. For its investment advisory services to the Fund, Chase
is entitled to receive an annual fee computed daily and paid monthly based at an
annual rate equal to 0.30% of the Fund's average daily net assets. Chase is
located at 270 Park Avenue, New York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Fund pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly-owned operating subsidiary of
Chase. CAM makes investment decisions for the Fund on a day-to-day basis. For
these services, CAM is entitled to receive a fee, payable by Chase from its
advisory fee, at an annual rate equal to 0.15% of the Fund's average daily net
assets. CAM was recently formed for the purpose of providing discretionary
investment advisory services to institutional clients and to consolidate Chase's
investment management function. The same individuals who serve as portfolio
managers for Chase also serve as portfolio managers for CAM. CAM is located at
1211 Avenue of the Americas, New York, New York 10036.
Portfolio Manager. John Schmucker, Vice President of Chase, has been
responsible for the day-to-day management of the Fund's portfolio since its
inception and, prior to that, was responsible for the day-to-day management of
The Hanover U.S. Government Securities Fund, the Fund's predecessor. Mr.
Schmucker joined Chase in May 1996. Prior to joining Chase, Mr. Schmucker was a
vice president and portfolio manager at The Portfolio Group Inc. Prior to
joining The Portfolio Group Inc. in 1992, Mr. Schumucker was the Chief
Investment Officer of Chemical Bank's Official Institutions Group. Previously,
he was a portfolio manager with Henry Kaufman & Company, Inc.
-9-
<PAGE>
HOW TO PURCHASE, REDEEM AND EXCHANGE SHARES
How to Purchase Shares
Institutional Shares may be purchased through selected financial service
firms, such as broker-dealer firms and banks ("Dealers") who have entered into a
selected dealer agreement with the Fund's distributor on each business day
during which the New York Stock Exchange is open for trading ("Fund Business
Day"). Qualified investors are defined as institutions, trusts, partnerships,
corporations, qualified and other retirement plans and fiduciary accounts opened
by a bank, trust company or thrift institution which exercises investment
authority over such accounts. The Fund reserves the right to reject any purchase
order or cease offering shares for purchase at any time.
Institutional Shares are sold at their public offering price, which is
their next determined net asset value. Orders received by Dealers in proper form
prior to the New York Stock Exchange closing time are confirmed at that day's
offering price, provided the order is received by the Vista Service Center prior
to its close of business. Dealers are responsible for forwarding orders for the
purchase of shares on a timely basis. Fund shares normally will be maintained in
book entry form and share certificates will be issued only upon request.
Management reserves the right to refuse to sell shares of the Fund to any
institution.
Federal regulations require that each investor provide a certified
Taxpayer Identification Number upon opening an account.
Minimum Investments
The Fund has established a minimum initial investment amount of $1,000,000
for the purchase of Institutional Shares. There is no minimum for subsequent
investments. Purchases of Institutional Shares offered by other non-money market
Vista funds may be aggregated with purchases of Institutional Shares of the Fund
to meet the $1,000,000 minimum initial investment amount requirement.
How to Redeem Shares
You may redeem all or any portion of the shares in your account at any
time at the net asset value next determined after a redemption request in proper
form is furnished by you to your Dealer and transmitted to and received by the
Vista Service Center. A wire redemption may be requested by telephone or wire to
the Vista Service Center. For telephone redemptions, call the Vista Service
Center at 1-800-622-4273.
In making redemption requests, the names of the registered shareholders on
your account and your account number must be supplied, along with any
certificates that represent shares you want to sell. The price you will receive
is the next net asset value calculated after the Fund receives your request in
proper form. In order to receive that day's net asset value, the Vista Service
Center must receive your request before the close of regular trading on the New
York Stock Exchange.
The Fund generally sends you payment for your shares by wire in federal
funds on the business day after your request is received. Under unusual
circumstances, the Fund may suspend redemptions, or postpone payment for more
than seven days, as permitted by federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Fund.
Unless an investor indicates otherwise on the account application, the Fund will
be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.
-10-
<PAGE>
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request or contact your
Dealer. The Telephone Redemption Privilege is not available if you were issued
certificates for shares that remain outstanding. The Telephone Redemption
Privilege may be modified or terminated without notice.
Selling shares through your Dealer. Your Dealer must receive your request
before the close of regular trading on the New York Stock Exchange to receive
that day's net asset value. Your Dealer will be responsible for furnishing all
necessary documentation to the Vista Service Center, and may charge you for its
services.
Involuntary Redemption of Accounts. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $1,000,000. In the event of any such redemption, you will
receive at least 60 days notice prior to the redemption.
How to Exchange Your Shares
You can exchange your shares for Institutional Shares of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer Institutional Shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully prior to any exchange
and retained for future reference.
For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, limit the amount or
number of exchanges or reject any exchange. In addition, any shareholder who
makes more than ten exchanges of shares involving the Fund in a year or three in
a calendar quarter will be charged a $5.00 administration fee for each such
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult the Vista Service Center before requesting an exchange.
The exchange privilege is subject to change or termination. See the SAI to find
out more about the exchange privilege.
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HOW THE FUND VALUES ITS SHARES
The net asset value of each class of the Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each Fund Business Day, by dividing the
net assets of the Fund attributable to that class by the total number of
outstanding shares of that class. Values of assets held by the Fund are
determined on the basis of their market or other fair value, as described in the
SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund declares dividends daily and distributes any net investment
income at least monthly. The Fund distributes any net realized capital gains at
least annually. Distributions from capital gains are made after applying any
available capital loss carryover.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares; (2) receive distributions from net
investment income in cash or by ACH to a pre-established bank account while
reinvesting capital gains distributions in additional shares; or (3) receive all
distributions in cash or by ACH. You can change your distribution option by
notifying the Vista Service Center in writing. If you do not select an option
when you open your account, all distributions will be reinvested. All
distributions not paid in cash or by ACH will be reinvested in shares of the
class on which the distributions are paid. You will receive a statement
confirming reinvestment of distributions in additional Fund shares promptly
following the quarter in which the reinvestment occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in another Vista fund. If the Vista Service Center does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Vista Service Center is returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. The Fund intends to distribute substantially all of
its ordinary income and capital gain net income on a current basis. If the Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxable as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
A portion of the ordinary income dividends paid by the Fund may qualify
for the 70% dividends-received deduction for corporate shareholders.
Distributions may also be subject to state and local taxes. However, the
laws of most states and localities exempt from some types of taxes distributions
such as those made by the Fund to the extent such distributions are attributable
to interest from obligations of the U.S. Government and certain of its agencies
and instrumentalities.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
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<PAGE>
Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUND
Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Institutional Shares of the Fund. These services
include assisting with purchase and redemption transactions, maintaining
shareholder accounts and records, furnishing customer statements, transmitting
shareholder reports and communications to customers and other similar
shareholder liaison services. For performing these services, each shareholder
servicing agent receives an annual fee of up to 0.25% of the average daily net
assets of Institutional Shares of the Fund held by investors for whom the
shareholder servicing agent maintains a servicing relationship. Shareholder
servicing agents may subcontract with other parties for the provision of
shareholder support services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by
Chase.
Administrator
Chase acts as administrator of the Fund and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets.
Sub-Administrator and Distributor
Vista Fund Distributors, Inc. ("VFD") acts as the Fund's
sub-administrator and distributor. VFD is a subsidiary of The BISYS Group, Inc.
and is unaffiliated with Chase. For the sub-administrative services it performs,
VFD is entitled to receive a fee from the Fund at an annual rate equal to
0.05% of the Fund's average daily net assets. VFD has agreed to use a portion
of this fee to pay for certain expenses incurred in connection with organizing
new series of the Trust and certain other ongoing expenses of the Trust. VFD is
located at 101 Park Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
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<PAGE>
Expenses
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Fund's custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Fund. Shareholder servicing and
distribution fees are allocated to specific classes of the Fund. In addition,
the Fund may allocate transfer agency and certain other expenses by class.
Service providers to the Fund may, from time to time, voluntarily waive all or a
portion of any fees to which they are entitled.
Organization and Description of Shares
The Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Shares have no
pre-emptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of the Fund generally vote
together except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class.
The Fund issues multiple classes of shares. This Prospectus relates only
to Institutional Shares of the Fund, one class of shares offered by the Fund.
Institutional Shares may be purchased only by qualified investors that make an
initial investment of $1,000,000 or more. "Qualified investors" are defined as
institutions, trusts, partnerships, corporations, qualified and other retirement
plans and fiduciary accounts opened by a bank, trust company or thrift
institution which exercises investment authority over such accounts. The Fund
offers other classes of shares in addition to these classes. The categories of
investors that are eligible to purchase shares may differ for each class of Fund
shares. In addition, other classes of Fund shares may be subject to differences
in sales charge arrangements, ongoing distribution and service fee levels, and
levels of certain other expenses, which will affect the relative performance of
the different classes. Investors may call 1-800-622-4273 to obtain additional
information about other classes of shares of the Fund that are offered. Any
person entitled to receive compensation for selling or servicing shares of the
Fund may receive different levels of compensation with respect to one class of
shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
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<PAGE>
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Fund, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase will
not invest the Fund's assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate, although
under certain circumstances such securities may be purchased from other members
of an underwriting syndicate in which Chase or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations, municipal obligations or commercial paper available to be purchased
by the Fund. Chase has informed the Fund that in making its investment
decisions, it does not obtain or use material inside information in the
possession of any other division or department of Chase, including the division
that performs services for the Fund as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Fund should be aware that, subject to
applicable legal or regulatory restrictions, Chase and its affiliates may
exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
PERFORMANCE INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income per share during a recent 30-day period by the
maximum public offering price per share of such class on the last day of that
period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the Fund
invested at the public offering price. Total return may also be presented for
other periods.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other mutual
funds and other investment vehicles. Quotation of investment performance for any
period when a fee waiver or expense limitation was in effect will be greater
than if the waiver or limitation had not been in effect. The Fund's
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<PAGE>
performance may be compared to other mutual funds, relevant indices and rankings
prepared by independent services. See the SAI.
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<PAGE>
VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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<PAGE>
PROSPECTUS
VISTA[SM] SOUTHEAST ASIAN FUND
VISTA[SM] JAPAN FUND
VISTA[SM] EUROPEAN FUND
Class A and B Shares
May 6, 1996
Investment Strategy: Capital Growth
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Funds in their May 6, 1996 Statement of
Additional Information, as amended periodically (the "SAI"). For a free copy of
the SAI, call the Vista Service Center at 1-800-34-VISTA. The SAI has been filed
with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUNDS ARE SUBJECT TO RISK--INCLUDING POSSIBLE LOSS OF
PRINCIPAL--AND WILL FLUCTUATE IN VALUE. SHARES OF THE FUNDS ARE NOT BANK
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN
BANK OR ANY OF ITS AFFILIATES AND ARE NOT INSURED BY, OBLIGATIONS OF OR
OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Expense Summary...........................................................
The expenses you might pay on your Fund investment, including examples
Fund Objectives...........................................................
Investment Approaches.....................................................
The kinds of securities in which the Vista Southeast Asian Fund,
the Vista Japan Fund and the Vista European Fund invest
Common Investment Policies................................................
The common investment policies of the Funds
Other Investment Practices................................................
The investment techniques and risks of the Funds
Management................................................................
Chase Manhattan Bank, the Funds' adviser; Chase Asset Management,
the Funds' sub-adviser, and the individuals who manage the Funds
About Your Investment.....................................................
Alternative sales arrangements
How to Buy, Sell and Exchange Shares......................................
How the Funds Value their Shares..........................................
How Distributions are Made; Tax Information...............................
How the Funds distribute their earnings, and
the taxes related to those earnings
Other Information Concerning the Funds....................................
Distribution plans, shareholder servicing agents, administration,
custodian, expenses, organization and regulatory matters
Performance Information...................................................
How performance is determined, stated and/or advertised
Make the Most of Your Vista Privileges....................................
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EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The
following table summarizes your costs from investing in each of the Funds based
on estimated expenses for the current fiscal year. The examples show the
cumulative expenses attributable to a hypothetical $1,000 investment over
specified periods.
Class A Class B
Shareholder Transaction Expenses Shares Shares
------- -------
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)................ 4.75% None
Maximum Deferred Sales Charge
(as a percentage of the lower of original
purchase price or redemption proceeds)(*).......... None 5.00%
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee
(after estimated waivers)(**)..................... 0.00% 0.00%
12b-1 Fee(***)..................................... 0.25% 0.75%
Shareholder Servicing Fee.......................... None 0.25%
Other Expenses (after estimated waivers and
reimbursements)(**) 1.50% 1.50%
----- -----
Total Fund Operating Expenses (after waivers of
fees and expense reimbursements)(**)............. 1.75% 2.50%
===== =====
Examples
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return:
1 Year 3 Years
------ -------
Class A Shares(+)................ $64 $100
Class B Shares:
Assuming complete
redemption at the
end of the
period(++)(+++)................ $77 $110
Assuming no
redemptions (+++).............. $25 $78
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* The maximum deferred sales charge on Class B shares applies to redemptions
during the first year after purchase; the charge generally declines by 1%
annually thereafter (except in the fourth year), reaching zero after six
years. See "How to Buy, Sell and Exchange Shares."
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** Reflects current fee waiver and expense reimbursement arrangements to
maintain Total Fund Operating Expenses at the levels indicated in the table
above. Absent such arrangements, the Investment Advisory Fee and Other
Expenses would be 1.00%, and 2.60%, respectively, for Class A and Class B
shares, and Total Fund Operating Expenses would be 3.85% and 4.60% for Class
A and Class B shares, respectively.
*** Long-term shareholders in mutual funds with 12b-1 fees, such as Class A and
Class B shareholders of the Funds, may pay more than the economic equivalent
of the maximum front-end sales charge permitted by rules of the National
Association of Securities Dealers, Inc.
+ Assumes deduction at the time of purchase of the maximum sales charge.
++ Assumes deduction at the time of redemption of the maximum applicable
deferred sales charge.
+++ Ten-year figures assume conversion of Class B shares to Class A shares at
the beginning of the ninth year after purchase. See "How to Buy, Sell and
Exchange Shares."
The table is provided to help you understand the expenses of investing in
the Funds and your share of the operating expenses that a Fund incurs. THE
EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE EXPENSES OR
RETURNS; ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN SHOWN.
Charges or credits, not reflected in the expense table above, may be
incurred directly by customers of financial institutions in connection with
investments in the Funds. The Funds understand that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Funds with respect to those
accounts. See "Other Information Concerning the Funds."
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<PAGE>
FUND OBJECTIVES
Each Fund seeks total return from long-term capital growth. No Fund is
intended to be a complete investment program, and there is no assurance that a
Fund will achieve its objective.
INVESTMENT APPROACHES
Vista Southeast Asian Fund
The Fund will invest principally in a broad portfolio of equity securities
of foreign companies located in countries throughout the Pacific and Far East
regions, with the exception of Japan. Under normal market conditions, the Fund
will invest at least 65% of its total assets in equity securities of Southeast
Asian issuers.
The Fund's advisers seek to identify those countries and industries
throughout the Pacific and Far East region (other than Japan) where economic and
political factors are likely to produce above-average growth rates. The Fund's
advisers attempt to identify those companies in such countries and industries
that are best positioned and managed to take advantage of these economic and
political factors. Emphasis will be placed on companies in Singapore, Malaysia,
Thailand, the Philippines and Indonesia, but the Fund will also invest in
companies in other countries in the Pacific and Far East region (other than
Japan), including Hong Kong, Australia, New Zealand, Taiwan and Korea.
Vista Japan Fund
The Fund will invest principally in equity securities of foreign companies
located in countries throughout the Pacific and Far East regions. Under normal
market conditions, the Fund will invest at least 65% of its total assets in
equity securities of Japanese issuers. Investments by the Fund may, from time to
time, also be made in securities traded in other securities markets of the
Pacific and Far East regions as determined by the Fund's advisers. Under current
market conditions, the Fund's advisers anticipate that the major portion of the
Fund's assets will be invested in securities traded in the securities markets of
Japan.
Vista European Fund
The Fund will invest principally in equity securities of companies with
principal business activities in countries located throughout Western Europe.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in equity securities of European issuers.
The Fund's advisers seek to identify those Western European countries and
industries where economic and political factors are likely to produce
above-average growth rates. The Fund's advisers attempt to identify those
companies in such countries and industries that are best positioned and managed
to take advantage of these economic and political factors. Western European
countries in which the Fund may invest include Austria, Belgium, Denmark,
Germany, Finland, France, Greece, Ireland, Italy, Luxembourg, Netherlands,
Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom, as well as
other Western European countries that the Fund's advisers deem to be of
investment grade. The Fund's advisers anticipate that the Fund generally will be
invested in a number of different Western European countries, although it may at
times invest most or all of its assets in a single country.
COMMON INVESTMENT POLICIES
In lieu of investing directly, each Fund is authorized to seek to achieve
its objective by investing all of its investable assets in an investment company
having substantially the same investment objective and policies as such Fund.
The equity securities in which the Funds may invest include common stocks,
preferred stocks, securities convertible into common stocks and warrants to
purchase common stocks. Investments will be selected based on their potential
for capital growth.
For purposes of the investment policies described above, a security is
deemed to be issued by an issuer of one of the countries or regions indicated
above if (i) the principal trading market for the security is in one of those
countries or regions, (ii) the issuer is organized under the laws of a
jurisdiction of one of those countries or regions or (iii) the issuer derives at
least fifty percent of its revenues or profits from those countries or regions
or has at least 50 percent of its assets situated in those countries or regions.
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The Funds' advisers will allocate each Fund's investments among securities
denominated in the U.S. dollar, other major reserve currencies and currencies of
countries referred to above in which that Fund is permitted to invest. The
advisers may adjust a Fund's exposure to each such currency based on their
perception of the most favorable markets and issuers. The percentage of a Fund's
assets invested in securities of a particular country or denominated in a
particular currency will vary in accordance with the advisers' assessment of the
relative yield and appreciation potential of such securities and the current and
anticipated relationship of a country's currency to the U.S. dollar. Fundamental
economic strength, earnings growth, quality of management, industry growth,
credit quality and interest rate trends are some of the principal factors which
may be considered by the Funds' advisers in determining whether to increase or
decrease the emphasis placed upon a particular type of security, industry
sector, country or currency within a Fund's investment portfolio. Securities
purchased by a Fund may be denominated in a currency other than that of the
country in which the issuer is domiciled. No Fund is limited as to the amount of
its assets that may be invested in any one country. However, each Fund will
attempt to allocate investments among a wide range of industries and companies.
Each Fund will place primary emphasis on equity securities and securities with
equity features. However, each Fund may also invest in any type of investment
grade debt security and various derivative securities if the advisers believe
that doing so may result in capital growth. The Vista Southeast Asian Fund and
the Vista European Fund will not invest more than 25% of their respective net
assets in debt securities denominated in a single currency other than the U.S.
dollar, or invest more than 25% of their respective net assets in debt
securities issued by a single foreign government or supranational organization.
The Funds' advisers will review economic and political events in the
countries in which the Funds are invested on an ongoing basis.
The Funds may invest in securities of companies of various sizes,
including smaller companies whose securities may be more volatile and less
liquid than securities of larger companies. With respect to certain countries in
which capital markets are either less developed or not easily accessed,
investments by the Funds may be made through investment in closed-end investment
companies that in turn are authorized to invest in the securities of such
countries.
Each Fund is classified as a "non-diversified" fund under federal
securities law. Each Fund's assets may be more concentrated in the securities of
any single issuer or group of issuers than if such Fund were diversified.
Each Fund may, for defensive purposes and in periods in which it is felt
that investment returns may be greater or volatility may be less, invest less
than 65% of its net assets in the equity securities in which it normally invests
by investing in debt securities issued in various currencies by companies,
governments and supranational entities located in countries in which the Fund is
permitted to invest. For temporary defensive purposes, a Fund's assets may be
invested in short-term debt instruments, including high quality money market
instruments and securities issued or guaranteed by the government of any member
country of the Organization for Economic Cooperation and Development or its
agencies or instrumentalities. To the extent that a Fund departs from its
investment policies during such periods, its investment objective may not be
achieved.
For a discussion of certain risks associated with an investment in the
Funds, see "Risk Factors" and "Other Investment Practices" below.
OTHER INVESTMENT PRACTICES
Each Fund may also engage in the following investment practices, when
consistent with such Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI.
Money Market Instruments. Each Fund may invest in cash or high-quality,
short-term money market instruments. Such instruments may include U.S.
Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
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Investment Grade Debt Securities. Investment grade debt securities are
securities rated in the category BBB or higher by Standard & Poor's Corporation
("S&P"), or Baa or higher by Moody's Investors Services, Inc. ("Moody's") or the
equivalent by another national rating organization, or, if unrated, determined
by the advisers to be of comparable quality.
Depositary Receipts. Each Fund may invest its assets in securities of
foreign issuers in the form of American Depositary Receipts, European Depositary
Receipts, Global Depositary Receipts or other similar securities representing
securities of foreign issuers (collectively, "Depositary Receipts"). The Funds
treat Depositary Receipts as interests in the underlying securities for purposes
of their investment policies. Each Fund will limit its investment in Depositary
Receipts not sponsored by the issuer of the underlying securities to no more
than 5% of the value of its net assets (at the time of investment).
Supranational and ECU Obligations. Each Fund may invest in securities
issued by supranational organizations, which include organizations such as The
World Bank, the European Community, the European Coal and Steel Community and
the Asian Development Bank. Vista European Fund may also invest in securities
denominated in the ECU, which is a "basket" consisting of specified amounts of
the currencies of certain member states of the European Community. These
securities are typically issued by European governments and supranational
organizations.
Indexed Investments. Each Fund may invest in instruments which are indexed
to certain specific foreign currency exchange rates. The terms of such
instruments may provide that their pincipal amounts or just their coupon
interest rates are adjusted upwards or downwards (but not below zero) at
maturity or on established coupon payment dates to reflect changes in the
exchange rate between two or more currencies while the obligation is
outstanding. Such indexed investments entail the risk of loss of principal
and/or interest payments from currency movements in addition to principal risk,
but offer the potential for realizing gains as a result of changes in foreign
currency exchange rates.
Repurchase Agreements, Securities Loans and Forward Commitments. Each Fund
may enter into agreements to purchase and resell securities at an agreed-upon
price and time. Each Fund also has the ability to lend portfolio securities in
an amount equal to not more than 30% of its total assets to generate additional
income. These transactions must be fully collateralized at all times. Each Fund
may purchase securities for delivery at a future date, which may increase its
overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date. These transactions involve
some risk to a Fund if the other party should default on its obligation and such
Fund is delayed or prevented from recovering the collateral or completing the
transaction.
Borrowings and Reverse Repurchase Agreements. Each Fund may borrow money
from banks for temporary or short-term purposes, but will not borrow for
leveraging purposes. The Funds may also sell and simultaneously commit to
repurchase a portfolio security at an agreed-upon price and time, to avoid
selling securities during unfavorable market conditions in order to meet
redemptions. Whenever a Fund enters into a reverse repurchase agreement, it will
establish a segregated account in which it will maintain liquid assets on a
daily basis in an amount at least equal to the repurchase price (including
accrued interest). A Fund would be required to pay interest on amounts obtained
through reverse repurchase agreements, which are considered borrowings under
federal securities laws.
Stand-By Commitments. Each Fund may enter into put transactions, including
transactions sometimes referred to as stand-by commitments, with respect to
securities in its portfolio. In these transactions, a Fund would acquire the
right to sell a security at an agreed upon price within a specified period prior
to its maturity date. These transactions involve some risk to a Fund if the
other party should default on its obligation and such Fund is delayed or
prevented from recovering the collateral or completing the transaction.
Acquisition of puts will have the effect of increasing the cost of the
securities subject to the put and thereby reducing the yields otherwise
available from such securities.
Convertible Securities. Each Fund may invest in convertible securities,
which are securities generally offering fixed interest or dividend yields which
may be converted either at a stated price or stated rate for common
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or preferred stock. Although to a lesser extent than with fixed-income
securities generally, the market value of convertible securities tends to
decline as interest rates increase, and increase as interest rates decline.
Because of the conversion feature, the market value of convertible securities
also tends to vary with fluctuations in the market value of the underlying
common or preferred stock.
Other Investment Companies. Each Fund may invest up to 10% of its total
assets in shares of other investment companies, subject to applicable regulatory
limitations.
Derivatives and Related Instruments. Each Fund may invest its assets in
derivative and related instruments to hedge various market risks or to increase
its income or gain. Some of these instruments will be subject to asset
segregation requirements to cover a Fund's obligations. Each Fund may (i)
purchase, write and exercise call and put options on securities and securities
indexes (including using options in combination with securities, other options
or derivative instruments); (ii) enter into swaps, futures contracts and options
on futures contracts; (iii) employ forward currency and interest rate contracts;
and (iv) purchase and sell structured products, which are instruments designed
to restructure or reflect the characteristics of certain other investments.
There are a number of risks associated with the use of derivatives and
related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which a Fund
invests may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of the Funds to successfully utilize
these instruments may depend in part upon the ability of the Funds' advisers to
forecast these factors correctly. Inaccurate forecasts could expose a Fund to a
risk of loss. There can be no guarantee that there will be a correlation between
price movements in a hedging instrument and in the portfolio assets being
hedged. The Funds are not required to use any hedging strategies. Hedging
strategies, while reducing risk of loss, can also reduce the opportunity for
gain. Derivatives transactions not involving hedging may have speculative
characteristics, involve leverage and result in more risk to a Fund than hedging
strategies using the same instruments. There can be no assurance that a liquid
market will exist at a time when a Fund seeks to close out a derivatives
position. Activities of large traders in the futures and securities markets
involving arbitrage, "program trading," and other investment strategies may
cause price distortions in derivatives markets. In certain instances,
particularly those involving over-the-counter transactions or forward contracts,
there is a greater potential that a counterparty or broker may default. In the
event of a default, a Fund may experience a loss. For additional information
concerning derivatives, related instruments and the associated risks, see the
SAI.
Portfolio Turnover. The frequency of each Fund's portfolio transactions
will vary from year to year. A Fund's investment policies may lead to frequent
changes in investments, particularly in periods of rapidly changing market
conditions. High portfolio turnover rates would generally result in higher
transaction costs, including brokerage commissions or dealer mark-ups, and would
make it more difficult for a Fund to qualify as a registered investment company
under federal tax law. See "How Distributions are Made; Tax Information" and
"Other Information Concerning the Funds--Certain Regulatory Matters."
Limiting Investment Risks
Specific investment restrictions help each Fund limit investment risks for
its shareholders. These restrictions prohibit each Fund from: (a) with respect
to 50% of its total assets, holding more than 10% of the voting securities of
any issuer; (b) investing more than 15% of its net assets in illiquid securities
(which include securities restricted as to resale unless they are determined to
be readily marketable in accordance with procedures established by the Board of
Trustees); or (c) investing more than 25% of its total assets in any one
industry. A complete description of these and other investment policies is
included in the SAI. Except for each Fund's investment objective, restriction
(c) above and investment policies designated as fundamental in the SAI, the
Funds' investment policies are not fundamental. The Trustees may change any
non-fundamental investment policy without shareholder approval.
Risk Factors
The net asset value of the shares of each Fund can be expected to
fluctuate based on the value of the securities in such Fund's portfolio. As each
Fund invests primarily in equity securities of companies outside the U.S., an
investment in its shares involves a higher degree of risk than an investment in
a U.S. equity fund. An investment in any of the Funds should not be considered a
complete investment program and may not be appropriate for all investors.
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Since foreign securities are normally denominated and traded in foreign
currencies, the values of a Fund's foreign investments may be affected favorably
or unfavorably by currency exchange rates and exchange control regulations.
There may be less information publicly available about foreign companies than
U.S. companies, and they are not generally subject to accounting, auditing and
financial reporting standards and practices comparable to those in the U.S. The
securities of foreign companies may be less liquid and more volatile than the
securities of comparable U.S. companies.
Foreign settlement procedures and trade regulations may involve certain
risks (such as delay in payment or delivery of securities or in the recovery of
a Fund's assets held abroad) and expenses. In particular, settlement procedures
in Korea are somewhat less developed and reliable than those in the U.S. and in
other developed securities markets, and the Vista Southeast Asian Fund may
experience settlement delays or other material difficulties and be subject to
significant delays or limitations on the volume of trading during any particular
period as a result of these factors. The foregoing factors could impede the
ability of a Fund to effect portfolio transactions on a timely basis and could
have an adverse impact on the net asset value of a Fund's shares.
It is possible that nationalization or expropriation of assets, imposition
of currency exchange controls, confiscatory taxation, political or financial
instability and diplomatic developments could affect the value of a Fund's
investments in certain foreign countries. Foreign laws may restrict the ability
to invest in certain countries or issuers and special tax considerations will
apply to foreign securities.
Investments in securities of issuers based in developing countries entails
certain additional risks, including greater risks of expropriation, confiscatory
taxation, nationalization, and less social, political and economic stability.
The small size of markets for securities of issuers based in such countries and
the low or non-existent volume of trading may result in a lack of liquidity and
in price volatility. Certain national policies may restrict the investment
opportunities, including restrictions on investing in issuers or industries
deemed sensitive to relevant national interests. There may be an absence of
developed legal structures governing private or foreign investment and private
property.
In addition, some of the foreign equity securities in which the Funds may
invest may be of smaller foreign companies. The securities of smaller companies,
whether foreign or domestic, often trade less frequently and in more limited
volume, and may be subject to more abrupt or erratic price movements, than
securities of larger, more established companies. Such companies may have
limited product lines, markets or financial resources, or may depend on a
limited management group.
Securities rated in the category Baa by Moody's or BBB by S&P lack certain
investment characteristics and may have speculative characteristics.
Because each Fund is "non-diversified," the value of its shares is more
susceptible to developments affecting issuers in which such Fund invests.
For a discussion of certain other risks associated with each Fund's
additional investment activities, see "Other Investment Practices" above.
MANAGEMENT
The Fund's Advisers
The Chase Manhattan Bank ("Chase") acts as investment adviser to the Funds
pursuant to an Investment Advisory Agreement and has overall responsibility for
investment decisions of the Funds, subject to the oversight of the Board of
Trustees. Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation,
a bank holding company. Chase and its predecessors have over 100 years of money
management experience. For its investment advisory services to the Funds, Chase
is entitled to receive an annual fee computed daily and paid monthly based at an
annual rate equal to 1.00% of each Fund's average daily net assets. Chase is
located at 270 Park Avenue, New York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to the Funds pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly-owned operating subsidiary of
Chase. CAM makes investment decisions for the Funds on a day-to-day basis. For
these services, CAM is entitled to receive a fee, payable by Chase from its
advisory fee, at an annual rate equal to 0.50% of each Fund's average daily net
assets. CAM was recently formed for the purpose of providing discretionary
investment advisory services to institutional clients and to consolidate Chase's
investment management function. The same individuals who serve as portfolio
managers for
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Chase also serve as portfolio managers for CAM. CAM is located at 1211 Avenue of
the Americas, New York, New York 10036.
Portfolio Managers. David Webb, Vice President of Chase, has been
responsible for the day-to-day management of the Vista Southeast Asian Fund and
the Vista Japan Fund since their inception. Mr. Webb was previously with Hambros
Bank Limited based in London and was responsible for the asset allocation and
portfolio management of international funds invested in Asia. Michael Browne,
Vice President of Chase, has been responsible for the day-to-day management of
the Vista European Fund since its inception. Mr. Browne is head of the European
Fund's management and research. Prior to joining Chase, Mr. Browne was Assistant
Director of Continental European Equities for BZW Investment Management, the
investment arm of Barclays Bank PLC, London, where he was responsible for stock
selection for external clients.
ABOUT YOUR INVESTMENT
Alternative Sales Arrangements
Class A shares. An investor who purchases Class A shares pays a sales
charge at the time of purchase. As a result, Class A shares are not subject to
any sales charges when they are redeemed. Certain purchases of Class A shares
qualify for reduced sales charges. Class A shares have lower combined 12b-1 and
service fees than Class B shares. See "How to Buy, Sell and Exchange Shares" and
"Other Information Concerning the Funds."
Class B shares. Class B shares are sold without an initial sales charge,
but are subject to a contingent deferred sales charge ("CDSC") if redeemed
within a specified period after purchase. Class B shares also have higher
combined 12b-1 and service fees than Class A shares.
Class B shares automatically convert into Class A shares, based on
relative net asset value, at the beginning of the ninth year after purchase. For
more information about the conversion of Class B shares, see the SAI. This
discussion will include information about how shares acquired through
reinvestment of distributions are treated for conversion purposes. Class B
shares provide an investor the benefit of putting all of the investor's dollars
to work from the time the investment is made. Until conversion, Class B shares
will have a higher expense ratio and pay lower dividends than Class A shares
because of the higher combined 12b-1 and service fees. See "How to Buy, Sell and
Exchange Shares" and "Other Information Concerning the Funds."
Which arrangement is best for you? The decision as to which class of
shares provides a more suitable investment for an investor depends on a number
of factors, including the amount and intended length of the investment.
Investors making investments that qualify for reduced sales charges might
consider Class A shares. Investors who prefer not to pay an initial sales charge
might consider Class B shares. In almost all cases, investors planning to
purchase $250,000 or more of a Fund's shares will pay lower aggregate charges
and expenses by purchasing Class A shares.
HOW TO BUY, SELL AND EXCHANGE SHARES
How to Buy Shares
You can open a Fund account with as little as $2,500 ($1,000 for IRAs,
SEP-IRAs and the Systematic Investment Plan) and make additional investments at
any time with as little as $100. You can buy Fund shares three ways--through an
investment representative, through the Funds' distributor by calling the Vista
Service Center, or through the Systematic Investment Plan.
All purchases made by check should be in U.S. dollars and made payable to
the Vista Funds. Third party checks, credit cards and cash will not be accepted.
The Funds reserve the right to reject any purchase order or cease offering
shares for purchase at any time. When purchases are made by check, redemptions
will not be
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allowed until clearance of the purchase check, which may take 15 calendar
days or longer. In addition, the redemption of shares purchased through ACH will
not be allowed until clearance of your payment which may take 7 business days or
longer.
Buying shares through the Funds' distributor. Complete and return the
enclosed application and your check in the amount you wish to invest to the
Vista Service Center.
Buying shares through systematic investing. You can make regular
investments of $100 or more per transaction through automatic periodic deduction
from your bank checking or savings account. Shareholders electing to start this
Systematic Investment Plan when opening an account should complete Section 8 of
the account application. Current shareholders may begin such a plan at any time
by sending a signed letter with signature guarantee and a deposit slip or voided
check to the Vista Service Center. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Shares are sold at the public offering price based on the net asset value
next determined after the Vista Service Center receives your order in proper
form. In most cases, in order to receive that day's public offering price, the
Vista Service Center must receive your order before the close of regular trading
on the New York Stock Exchange. If you buy shares through your investment
representative, the representative must receive your order before the close of
regular trading on the New York Stock Exchange to receive that day's public
offering price. Orders for shares are accepted by each Fund after funds are
converted to federal funds. Orders paid by check and received by 2:00 p.m.,
Eastern Time will generally be available for the purchase of shares the
following business day.
If you are considering redeeming or exchanging shares or transferring
shares to another person shortly after purchase, you should pay for those shares
with a certified check to avoid any delay in redemption, exchange or transfer.
Otherwise the Fund may delay payment until the purchase price of those shares
has been collected or, if you redeem by telephone, until 15 calendar days after
the purchase date. To eliminate the need for safekeeping, a Fund will not issue
certificates for your Class A shares unless you request them. Due to the
conversion feature of Class B shares, certificates for Class B shares will not
be issued and all Class B shares will be held in book entry form.
Class A Shares
The public offering price of Class A shares is the net asset value plus a
sales charge that varies depending on the size of your purchase. The Funds
receive the net asset value. The sales charge is allocated between your
broker-dealer and the Funds' distributor as shown in the following table,
except when the Funds' distributor, in its discretion, allocates the entire
amount to your broker-dealer.
- -------------------------------------------------------------------------------
Sales charge as a
percentage of: Amount of sales charge
Amount of transaction at Offering Net amount reallowed to dealers as a
offering price($) price invested percentage of offering price
- -------------------------------------------------------------------------------
Under 100,000 4.75 4.99 4.00
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100,000 but under 250,000 3.75 3.90 3.25
- -------------------------------------------------------------------------------
250,000 but under 500,000 2.50 2.56 2.25
- -------------------------------------------------------------------------------
500,000 but under 1,000,000 2.00 2.04 1.75
- -------------------------------------------------------------------------------
There is no initial sales charge on purchases of Class A shares of $1
million or more.
The Funds' distributor pays broker-dealers commissions on net sales of
Class A shares of $1 million or more based on an investor's cumulative purchases
of shares of a Fund. Such commissions are paid at the rate of 1.00% of the
amount under $2.5 million, 0.75% of the next $7.5 million, 0.50% of the next $40
million and 0.20% thereafter. The Funds' distributor may withhold such payments
with respect to short-term investments.
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Class B Shares
Class B shares are sold without an initial sales charge, although a CDSC
will be imposed if you redeem shares within a specified period after purchase,
as shown in the table below. The following types of shares may be redeemed
without charge at any time: (i) shares acquired by reinvestment of distributions
and (ii) shares otherwise exempt from the CDSC, as described below. For other
shares, the amount of the charge is determined as a percentage of the lesser of
the current market value or the purchase price of shares being redeemed.
Year 1 2 3 4 5 6 7 8+
- --------------------------------------------------------------
CDSC 5% 4% 3% 3% 2% 1% 0% 0%
In determining whether a CDSC is payable on any redemption, each Fund will
first redeem shares not subject to any charge, and then shares held longest
during the CDSC period. When a share that has appreciated in value is redeemed
during the CDSC period, a CDSC is assessed only on its initial purchase price.
For information on how sales charges are calculated if you exchange your shares,
see "How to Exchange Your Shares." The Funds' distributor pays broker-dealers a
commission of 4.00% of the offering price on sales of Class B shares, and the
disributor receives the entire amount of any CDSC you pay.
General
You may be eligible to buy Class A shares at reduced sales charges. Consult
your investment representative or the Vista Service Center for details about
Vista's combined purchase privilege, cumulative quantity discount, statement of
intention, group sales plan, employee benefit plans, and other plans.
Descriptions are also included in the enclosed application and in the SAI. In
addition, sales charges will not apply to shares purchased with redemption
proceeds received within the prior ninety days from non-Vista mutual funds on
which the investor paid a front-end or contingent deferred sales charge.
A participant-directed employee benefit plan participating in a
"multi-fund" program approved by the Board of Trustees may include amounts
invested in the other mutual funds participating in such program for purposes of
determining whether the plan may purchase Class A shares at net asset value.
These investments will also be included for purposes of the discount privileges
and programs described above.
The Funds may sell Class A shares at net asset value without an initial
sales charge to the current and retired Trustees (and their immediate families),
current and retired employees (and their immediate families) of Chase, the
Funds' distributor and transfer agent or any affiliates or subsidiaries thereof,
registered representatives and other employees (and their immediate families) of
broker-dealers having selected dealer agreements with the Funds' distributor,
employees (and their immediate families) of financial institutions having
selected dealer agreements with the Funds' distributor (or otherwise having an
arrangement with a broker-dealer or financial institution with respect to sales
of Vista fund shares) financial institution trust departments investing an
aggregate of $1 million or more in the Vista Family of Funds and clients of
certain administrators of tax-qualified plans when proceeds from repayments of
loans to participants are invested (or reinvested) in the Vista Family of Funds.
No initial sales charge will apply to the purchase of Class A shares of
the Funds by an investor seeking to invest the proceeds of a qualified
retirement plan, where a portion of the plan was invested in the Vista Family of
Funds, any qualified retirement plan with 50 or more participants, or an
individual participant in a tax-qualified plan making a tax-free rollover or
transfer of assets from the plan in which Chase or an affiliate serves as
trustee or custodian of the plan or manages some portion of the plan's assets.
Purchases of Class A shares of the Funds may be made with no initial sales
charge through an investment adviser or financial planner that charges a fee for
its services. Purchases of Class A shares of the Funds may
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be made with no initial sales charge (i) by an investment adviser, broker or
financial planner, provided arrangements are preapproved and purchases are
placed through an omnibus account with the Funds or (ii) by clients of such
investment adviser or financial planner who place trades for their own accounts,
if such accounts are linked to a master account of such investment adviser or
financial planner on the books and records of the broker or agent. Such
purchases may be made for retirement and deferred compensation plans and trusts
used to fund those plans.
Purchases of Class A shares of the Funds may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary exercising investment discretion, provided that
appropriate notification of such fiduciary relationship is reported at the time
of the investment to the particular Funds, the Funds' distributor or the Vista
Service Center.
Shareholders of record of any Vista fund as of November 30, 1990 and
certain immediate family members may purchase Class A shares of the Funds with
no initial sales charge for as long as they continue to own Class A shares of
any Vista fund, provided there is no change in account registration.
Shareholders of record of any portfolio of The Hanover Funds, Inc. or The
Hanover Investment Funds, Inc. as of May 3, 1996 and certain related investors
may purchase Class A shares of the Funds with no initial sales charge for as
long as they continue to own shares of any Vista fund following this date,
provided there is no change in account registration.
The Funds may sell Class A shares at net asset value without an initial
sales charge in connection with the acquisition by the Funds of assets of an
investment company or personal holding company. The CDSC will be waived on
redemption of Class B shares arising out of death or disability or in connection
with certain withdrawals from IRA or other retirement plans. Up to 12% of the
value of Class B shares subject to a systematic withdrawal plan may also be
redeemed each year without a CDSC, provided that the Class B account had a
minimum balance of $20,000 with respect to the applicable Fund at the time the
systematic withdrawal plan was established. The SAI contains additional
information about purchasing the Funds' shares at reduced sales charges.
The Funds reserve the right to change any of these policies on purchases
without an initial sales charge at any time and may reject any such purchase
request.
Shareholders of other Vista funds may be entitled to exchange their shares
for, or reinvest distributions from their funds in, shares of the Funds at net
asset value.
How to Sell Shares
You can sell your shares to a Fund any day the New York Stock Exchange is
open, either directly to a Fund or through your investment representative. A
Fund will only forward redemption payments on shares for which it has collected
payment of the purchase price.
Selling shares directly to a Fund. Send a signed letter of instruction
to the Vista Service Center, along with any certificates that represent shares
you want to sell. The price you will receive is the next net asset value
calculated after the particular Fund receives your request in proper form, less
any applicable CDSC. In order to receive that day's net asset value, the Vista
Service Center must receive your request before the close of regular trading on
the New York Stock Exchange.
If you sell shares having a net asset value of $100,000 or more, the
signatures of registered owners or their legal representatives must be
guaranteed by a bank, broker-dealer or certain other financial institutions. See
the SAI for more information about where to obtain a signature guarantee.
If you want your redemption proceeds sent to an address other than your
address as it appears on Vista's records, a signature guarantee is required. A
Fund may require additional documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Vista Service Center for details.
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A Fund generally sends you payment for your shares the business day after
your request is received, assuming the Fund has collected payment of the
purchase price of your shares. Under unusual circumstances, the Funds may
suspend redemptions, or postpone payment for more than seven days, as permitted
by federal securities law.
You may use Vista's Telephone Redemption Privilege to redeem shares from
your account unless you have notified the Vista Service Center of an address
change within the preceding 30 days. Telephone redemption requests in excess of
$25,000 will only be made by wire to a bank account on record with the Funds.
Unless an investor indicates otherwise on the account application, the Funds
will be authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Funds with his or her account registration
and address as it appears on the Funds' records.
The Vista Service Center will employ these and other reasonable procedures
to confirm that instructions communicated by telephone are genuine; if it fails
to employ reasonable procedures, a Fund may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither a Fund nor its agents will be
liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Vista Service Center.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Vista Service Center by telephone. In this
event, you may wish to submit a written redemption request, as described above,
or contact your investment representative. The Telephone Redemption Privilege is
not available if you were issued certificates for shares that remain
outstanding. The Telephone Redemption Privilege may be modified or terminated
without notice.
Systematic withdrawal. You can make regular withdrawals of $50 or more
($100 or more for Class B accounts) monthly, quarterly or semiannually. A
minimum account balance of $5,000 is required to establish a systematic
withdrawal plan for Class A accounts. Call the Vista Service Center at
1-800-34-VISTA for complete instructions.
Selling shares through your investment representative. Your investment
representative must receive your request before the close of regular trading on
the New York Stock Exchange to receive that day's net asset value. Your
investment representative will be responsible for furnishing all necessary
documentation to the Vista Service Center, and may charge you for its services.
Involuntary Redemption of Accounts. Each Fund may involuntarily redeem
your shares if at such time the aggregate net asset value of the shares in your
account is less than $500 or if you purchase through the Systematic Investment
Plan and fail to meet that Fund's investment minimum within a twelve month
period. In the event of any such redemption, you will receive at least 60 days
notice prior to the redemption. In the event a Fund redeems Class B shares
pursuant to this provision, no CDSC will be imposed.
How to Exchange Your Shares
You can exchange your shares for shares of the same class of certain other
Vista funds at net asset value beginning 15 days after purchase. Not all Vista
funds offer all classes of shares. The prospectus of the other Vista fund into
which shares are being exchanged should be read carefully and retained for
future reference. If you exchange shares subject to a CDSC, the transaction will
not be subject to the CDSC. However, when you redeem the shares acquired through
the exchange, the redemption may be subject to the CDSC, depending upon when you
originally purchased the shares. The CDSC will be computed using the schedule of
any fund into or from which you have exchanged your shares that would result in
your paying the highest CDSC applicable to your class of shares. In computing
the CDSC, the length of time you have owned your shares will be measured from
the date of original purchase and will not be affected by any exchange.
An exchange of Class B shares into any of the Vista money market funds
other than the Class B shares of the Vista Prime Money Market Fund will be
treated as a redemption -- and therefore subject to the conditions of the CDSC
- -- and a subsequent purchase. Class B shares of any Vista non-money market fund
may be exchanged into the Class B shares of the Vista Prime Money Market Fund in
order to continue the aging of the initial purchase of such shares.
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For federal income tax purposes, an exchange is treated as a sale of
shares and generally results in a capital gain or loss.
A Telephone Exchange Privilege is currently available. Call the Vista
Service Center for procedures for telephone transactions. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding. Ask your investment representative or the Vista Service
Center for prospectuses of other Vista funds. Shares of certain Vista funds are
not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where Vista management or the Trustees
believe doing so would be in the best interests of the Funds, the Funds reserve
the right to revise or terminate the exchange privilege, limit the amount or
number of exchanges or reject any exchange. In addition, any shareholder who
makes more than ten exchanges of shares involving a Fund in a year or three in a
calendar quarter will be charged a $5.00 administration fee for each such
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult the Vista Service Center before requesting an exchange.
See the SAI to find out more about the exchange privilege.
Reinstatement privilege. Class A shareholders have a one time privilege of
reinstating their investment in a Fund at net asset value next determined
subject to written request within 90 calendar days of the redemption,
accompanied by payment for the shares (not in excess of the redemption). Class B
shareholders who have redeemed their shares and paid a CDSC with such redemption
may purchase Class A shares with no initial sales charge (in an amount not in
excess of their redemption proceeds) if the purchase occurs within 90 days of
the redemption of the Class B shares.
HOW THE FUNDS VALUES THEIR SHARES
The net asset value of each class of each Fund's shares is determined once
daily based upon prices determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern time, however, options are
priced at 4:15 p.m., Eastern time), on each business day of the Funds, by
dividing the net assets of the particular Fund attributable to that class by the
total number of outstanding shares of that class. Values of assets held by the
Funds are determined on the basis of their market or other fair value, as
described in the SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
Each Fund distributes any net investment income at least semi-annually and
any net realized capital gains at least annually. Distributions from capital
gains are made after applying any available capital loss carryovers.
Distributions paid by the Funds with respect to Class A shares will generally be
greater than those paid with respect to Class B shares because expenses
attributable to Class B shares will generally be higher.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares without a sales charge; (2) receive
distributions from net investment income in cash or by ACH to a pre-established
bank account while reinvesting capital gains distributions in additional shares
without a sales charge; or (3) receive all distributions in cash or by ACH. You
can change your distribution option by notifying the Vista Service Center in
writing. If you do not select an option when you open your account, all
distributions will be reinvested. All distributions not paid in cash or by ACH
will be reinvested in shares of the class on which the distributions are paid.
You will receive a statement confirming reinvestment of distributions in
additional Fund shares promptly following the quarter in which the reinvestment
occurs.
If a check representing a Fund distribution is not cashed within a
specified period, the Vista Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the
applicable Fund or in another Vista fund. If the Vista Service Center does not
receive your election, the distribution will be reinvested
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in the particular Fund. Similarly, if correspondence sent by a Fund or the Vista
Service Center is returned as "undeliverable," distributions will automatically
be reinvested in such Fund.
Each Fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements that are
necessary for it to be relieved of federal taxes on income and gains it
distributes to shareholders. Each Fund intends to distribute substantially all
of its ordinary income and capital gain net income on a current basis. If a Fund
does not qualify as a regulated investment company for any taxable year or does
not make such distributions, the Fund will be subject to tax on all of its
income and gains.
Distributions by the Funds will be taxable to you as ordinary income,
except that any distributions of net long-term capital gains will be taxable as
such, regardless of how long you have held the shares. Distributions will be
taxable as described above whether received in cash or in shares through the
reinvestment of distributions.
Investment income received by the Funds from sources within foreign
countries may be subject to foreign taxes withheld at the source. Since more
than 50% of the value of the total assets of each Fund at the close of the
Fund's taxable year is anticipated to be stock or securities of foreign
corporations, each Fund may elect to "pass through" to its shareholders the
amount of foreign taxes paid by such Fund.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next distribution date. Those investors purchasing
shares just prior to a distribution will be taxed on the entire amount of the
distribution received, even though the net asset value per share on the date of
such purchase reflected the amount of such distribution.
Early in each calendar year each Fund will notify you of the amount and
tax status of distributions paid to you by the Fund for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in a Fund. You should consult your tax adviser to determine the
precise effect of an investment in a Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION CONCERNING THE FUNDS
Distribution Plans
The Funds' distributor is Vista Fund Distributors, Inc. ("VFD"). VFD is a
subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase. The Trust
has adopted Rule 12b-1 distribution plans for Class A and Class B shares which
provide that the Funds will pay distribution fees at annual rates of up to 0.25%
and 0.75% of the average daily net assets attributable to Class A and Class B
shares of each Fund, respectively. Payments under the distribution plans shall
be used to compensate or reimburse the Funds' distributor and broker-dealers for
services provided and expenses incurred in connection with the sale of Class A
and Class B shares, and are not tied to the amount of actual expenses incurred.
Payments may be used to compensate broker-dealers with trail or maintenance
commissions at an annual rate of up to 0.25% of the average daily net asset
value of Class A or Class B shares maintained in a Fund by customers of these
broker-dealers. Trail or maintenance commissions are paid to broker-dealers
beginning the 13th month following the purchase of shares by their customers.
Some activities intended to promote the sale of Class A and Class B shares will
be conducted generally by the Vista Family of Funds, and activities intended to
promote a Fund's Class A or Class B shares may also benefit the Fund's other
shares and other Vista funds.
VFD may provide promotional incentives to broker-dealers that meet
specified sales targets for one or more Vista funds. These incentives may
include gifts of up to $100 per person annually; an occasional meal, ticket to a
sporting event or theater or entertainment for broker-dealers and their guests;
and payment or reimbursement for travel expenses, including lodging and meals,
in connection with attendance at training and educational meetings within and
outside the U.S.
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Shareholder Servicing Agents
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Class B shares of the Funds. These services
include assisting with purchase and redemption transactions, maintaining
shareholder accounts and records, furnishing customer statements, transmitting
shareholder reports and communications to customers and other similar
shareholder liaison services. For performing these services, each shareholder
servicing agent receives an annual fee of up to 0.25% of the average daily net
assets of Class B shares of each Fund held by investors for whom the shareholder
servicing agent maintains a servicing relationship. Shareholder servicing agents
may subcontract with other parties for the provision of shareholder support
services.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.
Chase may from time to time, at its own expense, provide compensation to
certain selected dealers for performing administrative services for their
customers. These services include maintaining account records, processing orders
to purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to 0.10% annually of the
average net assets of a Fund attributable to shares of such Fund held by
customers of such selected dealers. Such compensation does not represent an
additional expense to a Fund or its shareholders, since it will be paid by
Chase.
Administrator and Sub-Administrator
Chase acts as the Funds' administrator and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of each Fund's
average daily net assets.
VFD provides certain sub-administrative services to the Funds' pursuant
to a distribution and sub-administration agreement and is entitled to receive
a fee for these services from each Fund at an annual rate equal to 0.05% of each
Funds' average daily net assets. VFD has agreed to use a portion of this fee to
pay for certain expenses incurred in connection with organizing new series of
the Trust and certain other ongoing expenses of the Trust. VFD is located at
101 Park Avenue, New York, New York 10178.
Custodian
Chase acts as custodian and fund accountant for the Funds and receives
compensation under an agreement with the Trust. Fund securities and cash may be
held by sub-custodian banks if such arrangements are reviewed and approved by
the Trustees.
Expenses
Each Fund pays the expenses incurred in its operations, including each
Fund's pro rata share of expenses of the Trust. These expenses include
investment advisory and administrative fees; the compensation of the Trustees;
registration fees; interest charges; taxes; expenses connected with the
execution, recording and settlement of security transactions; fees and expenses
of the Fund's custodian for all services to the Funds, including safekeeping of
funds and securities and maintaining required books and accounts; expenses of
preparing and mailing reports to investors and to government offices and
commissions; expenses of meetings of investors; fees and expenses of independent
accountants, of legal counsel and of any transfer agent, registrar or dividend
disbursing agent of the Trust; insurance premiums; and expenses of calculating
the net asset value of, and the net income on, shares of the Funds. Shareholder
servicing and distribution fees are allocated to specific classes of each of the
Funds. In addition, the Funds may allocate transfer agency and certain other
expenses by class. Service providers to a Fund may, from time to time,
voluntarily waive all or a portion of any fees to which they are entitled.
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Organization and Description of Shares
Each Fund is a portfolio of Mutual Fund Group, an open-end management
investment company organized as a Massachusetts business trust in 1987 (the
"Trust"). The Trust has reserved the right to create and issue additional series
and classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Shares have no
preemptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each whole share held, and each fractional share shall be entitled to a
proportionate fractional vote, except that Trust shares held in the treasury of
the Trust shall not be voted. Shares of each class of a Fund generally vote
together except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class.
Each Fund issues multiple classes of shares. This Prospectus relates to
Class A and Class B shares of each Fund. The Funds may offer other classes of
shares in addition to these classes. The categories of investors that are
eligible to purchase shares and minimum investment requirements may differ for
each class of each Fund's shares. In addition, other classes of Fund shares may
be subject to differences in sales charge arrangements, ongoing distribution and
service fee levels, and levels of certain other expenses, which would affect the
relative performance of the different classes. Investors may call 1-800-34-VISTA
to obtain additional information about other classes of shares of the Funds that
are offered. Any person entitled to receive compensation for selling or
servicing shares of a Fund may receive different levels of compensation with
respect to one class of shares over another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The Trustees
will promptly call a meeting of shareholders to remove a trustee(s) when
requested to do so in writing by record holders of not less than 10% of all
outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Certain Regulatory Matters
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in this Prospectus without violating such laws. If future changes in
these laws or interpretations required Chase to alter or discontinue any of
these services, it is expected that the Board of Trustees would recommend
alternative arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations of
banking law described above and banks may be required to register as dealers
pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of the
Funds, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Funds' distributor or affiliates of the distributor. Chase will
not invest the Funds' assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any
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affiliate, although under certain circumstances such securities may be purchased
from other members of an underwriting syndicate in which Chase or an affiliate
is a non-principal member. This restriction may limit the amount or type of U.S.
Government obligations, municipal obligations or commercial paper available to
be purchased by the Funds. Chase has informed the Funds that in making its
investment decisions, it does not obtain or use material inside information in
the possession of any other division or department of Chase, including the
division that performs services for the Funds as custodian, or in the possession
of any affiliate of Chase. Shareholders of the Funds should be aware that,
subject to applicable legal or regulatory restrictions, Chase and its affiliates
may exchange among themselves certain information about the shareholder and his
account. Transactions with affiliated broker-dealers will only be executed on an
agency basis in accordance with applicable federal regulations.
PERFORMANCE INFORMATION
Each Fund's investment performance may from time to time be included in
advertisements about the Funds. Performance is calculated separately for each
class of shares. "Yield" for each class of shares is calculated by dividing the
annualized net investment income per share during a recent 30-day period by the
maximum public offering price per share of such class on the last day of that
period.
"Total return" for the one-, five- and ten-year periods (or for the life
of a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in a Fund
invested at the maximum public offering price (in the case of Class A shares) or
reflecting the deduction of any applicable contingent deferred sales charge (in
the case of Class B shares). Total return may also be presented for other
periods or without reflecting sales charges. Any quotation of investment
performance not reflecting the maximum initial sales charge or contingent
deferred sales charge would be reduced if such sales charges were used.
All performance data is based on each Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of each
Fund's portfolio, each Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Funds' investment objectives and policies. These factors should be
considered when comparing each Fund's investment results to those of other
mutual funds and other investment vehicles. Quotation of investment performance
for any period when a fee waiver or expense limitation was in effect will be
greater than if the waiver or limitation had not been in effect. Each Fund's
performance may be compared to other mutual funds, relevant indices and rankings
prepared by independent services. See the SAI.
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MAKE THE MOST OF YOUR VISTA PRIVILEGES
The following services are available to you as a Vista mutual fund shareholder.
o SYSTEMATIC INVESTMENT PLAN - Invest as much as you wish ($100 or more) in
the first or third week of any month. The amount will be automatically
transferred from your checking or savings account.
o SYSTEMATIC WITHDRAWAL - Make regular withdrawals of $50 or more ($100 or
more for Class B accounts) monthly, quarterly or semiannually. A minimum
account balance of $5,000 is required to establish a systematic withdrawal
plan for Class A accounts.
o SYSTEMATIC EXCHANGE - Transfer assets automatically from one Vista account
to another on a regular, prearranged basis. There is no additional charge
for this service.
o FREE EXCHANGE PRIVILEGE - Exchange money between Vista funds in the same
class of shares without charge. The exchange privilege allows you to
adjust your investments as your objectives change.
Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange and systematic withdrawal or exchange.
o REINSTATEMENT PRIVILEGE - Class A shareholders have a one time privilege
of reinstating their investment in their Fund at net asset value next
determined subject to written request within 90 calendar days of the
redemption, accompanied by payment for the shares (not in excess of the
redemption).
Class B shareholders of a Fund who have redeemed their shares and paid a
CDSC with such redemption may purchase Class A shares of that Fund with no
initial sales charge (in an amount not in excess of their redemption
proceeds) if the purchase occurs within 90 days of the redemption of the
Class B shares.
For more information about any of these services and privileges, call your
shareholder servicing agent, investment representative or the Vista Service
Center at 1-800-34-VISTA. These privileges are subject to change or termination.
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VISTA FAMILY OF FUNDS
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
Transfer Agent and Dividend Paying Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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PART B
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
May 6, 1996
VISTA[SM] AMERICAN VALUE FUND
VISTA[SM] BALANCED FUND
VISTA[SM] BOND FUND
VISTA[SM] CAPITAL GROWTH FUND
VISTA[SM] EQUITY INCOME FUND
VISTA[SM] GROWTH AND INCOME FUND
VISTA[SM] LARGE CAP EQUITY FUND
VISTA[SM] SHORT-TERM BOND FUND
VISTA[SM] SMALL CAP EQUITY FUND
VISTA[SM] U.S. GOVERNMENT SECURITIES FUND
VISTA[SM] U.S. TREASURY INCOME FUND
101 Park Avenue, New York, New York 10178
This Statement of Additional Information sets forth information which
may be of interest to investors but which is not necessarily included in the
Prospectuses offering shares of the Funds. This Statement of Additional
Information should be read in conjunction with the Prospectuses offering shares
of Vista U.S. Government Securities Fund, Vista U.S. Treasury Income Fund, Vista
Bond Fund and Vista Short-Term Bond Fund (collectively the "Income Funds"), and
Vista American Value Fund, Vista Balanced Fund, Vista Equity Income Fund, Vista
Growth and Income Fund, Vista Capital Growth Fund, Vista Large Cap Equity Fund
and Vista Small Cap Equity Fund (collectively the "Equity Funds"). Any
references to a "Prospectus" in this Statement of Additional Information is a
reference to one or more of the foregoing Prospectuses, as the context requires.
Copies of each Prospectus may be obtained by an investor without charge by
contacting Vista Fund Distributors, Inc.("VFD"), the Funds' distributor (the
"Distributor"), at the above-listed address.
This Statement of Additional Information is NOT a prospectus and is
authorized for distribution to prospective investors only if preceded or
accompanied by an effective prospectus.
For more information about your account, simply call or write the
Vista Service Center at:
1-800-34-VISTA
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141
<PAGE>
Table of Contents
Page
The Funds.................................................................. 3
Investment Policies and Restrictions....................................... 4
Performance Information....................................................22
Determination of Net Asset Value...........................................28
Purchases, Redemptions and Exchanges ......................................29
Tax Matters................................................................31
Management of the Trust and Funds or Portfolios ...........................36
Independent Accountants....................................................47
General Information........................................................47
Appendix A -Description of Certain Obligations Issued or Guaranteed by
U.S. Government Agencies or Instrumentalities .................A-1
Appendix B -Description of Ratings.........................................B-1
2
<PAGE>
THE FUNDS
Mutual Fund Group (the "Trust") is an open-end management investment
company which was organized as a business trust under the laws of the
Commonwealth of Massachusetts on May 11, 1987. The Trust presently consists of
16 separate series (the "Funds"). Certain of the Funds are diversified and other
Funds are non-diversified, as such term is defined in the Investment Company Act
of 1940, as amended (the "1940 Act"). The shares of the Funds are collectively
referred to in this Statement of Additional Information as the "Shares."
The Growth and Income Fund and Capital Growth Fund converted to a master
fund/feeder fund structure in December 1993. Under this structure, each of these
Funds seeks to achieve its investment objective by investing all of its
investable assets in an open-end management investment company which has the
same investment objective as that Fund. The Growth and Income Fund invests in
the Growth and Income Portfolio and the Capital Growth Fund invests in the
Capital Growth Portfolio (collectively the "Portfolios"). Each of the Portfolios
is a New York trust with its principal office in New York. Certain qualified
investors, in addition to a Fund, may invest in a Portfolio. For purposes of
this Statement of Additional Information, any information or references to
either or both of the Portfolios refer to the operations and activities after
implementation of the master fund/feeder fund structure.
On May 3, 1996, The Hanover American Value Fund merged into Vista American
Value Fund, The Hanover Large Cap Equity Fund merged into the Institutional
Shares of Vista Large Cap Equity Fund, The Hanover Short-Term Bond Fund merged
into the Class A shares of Vista Short-Term Bond Fund, Investor Shares of The
Hanover Small Cap Equity Fund merged into the Class A shares of Vista Small Cap
Equity Fund, CBC Benefit Shares of The Hanover Small Cap Equity Fund merged into
the Institutional Shares of Vista Small Cap Equity Fund and The Hanover U.S.
Government Securities Fund merged into the Institutional Shares of Vista U.S.
Government Securities Fund. The foregoing mergers are referred to herein as the
"Hanover Reorganization."
Effective as of May 6, 1996, Vista U.S. Government Income Fund changed
its name to Vista U.S. Treasury Income Fund and Vista Equity Fund changed its
name to Vista Large Cap Equity Fund.
The Board of Trustees of the Trust provides broad supervision over the
affairs of the Trust including the Funds. In the case of the Portfolios,
separate Boards of Trustees, with certain common members, provide broad
supervision. The Chase Manhattan Bank ("Chase") is the investment adviser for
the Funds (other than the Growth and Income Fund and Capital Growth Fund, which
do not have their own advisers) and the two Portfolios. Chase also serves as the
Trust's administrator (the "Administrator") and supervises the overall
administration of the Trust, including the Funds, and is the administrator of
the Portfolios. A majority of the Trustees of the Trust are not affiliated with
the investment adviser or sub-advisers. Similarly, a majority of the Trustees of
the Portfolios are not affiliated with the investment adviser or sub-advisers.
3
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INVESTMENT POLICIES AND RESTRICTIONS
Investment Policies
The Prospectuses set forth the various investment policies of each Fund
and Portfolio. The following information supplements and should be read in
conjunction with the related sections of each Prospectus. For descriptions of
the securities ratings of Moody's Investors Service, Inc. ("Moody's"), Standard
& Poor's Corporation ("S&P") and Fitch Investors Service, Inc. ("Fitch"), see
Appendix B.
U.S. Government Securities. U.S. Government Securities include (1) U.S.
Treasury obligations, which generally differ only in their interest rates,
maturities and times of issuance, including: U.S. Treasury bills (maturities of
one year or less), U.S. Treasury notes (maturities of one to ten years) and U.S.
Treasury bonds (generally maturities of greater than ten years); and (2)
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities which are supported by any of the following: (a) the full
faith and credit of the U.S. Treasury, (b) the right of the issuer to borrow any
amount listed to a specific line of credit from the U.S. Treasury, (c)
discretionary authority of the U.S. Government to purchase certain obligations
of the U.S. Government agency or instrumentality or (d) the credit of the agency
or instrumentality. Agencies and instrumentalities of the U.S. Government
include but are not limited to: Federal Land Banks, Federal Financing Banks,
Banks for Cooperatives, Federal Intermediate Credit Banks, Farm Credit Banks,
Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal
National Mortgage Association, Student Loan Marketing Association, United States
Postal Service, Chrysler Corporate Loan Guarantee Board, Small Business
Administration, Tennessee Valley Authority and any other enterprise established
or sponsored by the U.S. Government. Certain U.S. Government Securities,
including U.S. Treasury bills, notes and bonds, Government National Mortgage
Association certificates and Federal Housing Administration debentures, are
supported by the full faith and credit of the United States. Other U.S.
Government Securities are issued or guaranteed by federal agencies or government
sponsored enterprises and are not supported by the full faith and credit of the
United States. These securities include obligations that are supported by the
right of the issuer to borrow from the U.S. Treasury, such as obligations of the
Federal Home Loan Banks, and obligations that are supported by the
creditworthiness of the particular instrumentality, such as obligations of the
Federal National Mortgage Association or Federal Home Loan Mortgage Corporation.
For a description of certain obligations issued or guaranteed by U.S. Government
agencies and instrumentalities, see Appendix A.
In addition, certain U.S. Government agencies and instrumentalities issue
specialized types of securities, such as guaranteed notes of the Small Business
Administration, Federal Aviation Administration, Department of Defense, Bureau
of Indian Affairs and Private Export Funding Corporation, which often provide
higher yields than are available from the more common types of government-backed
instruments. However, such specialized instruments may only be available from a
few sources, in limited amounts, or only in very large denominations; they may
also require specialized capability in portfolio servicing and in legal matters
related to government guarantees. While they may frequently offer attractive
yields, the limited-activity markets of many of these securities means that, if
a Fund or Portfolio were required to liquidate any of them, it might not be able
to do so advantageously; accordingly, each Fund and Portfolio investing in such
securities normally to hold such securities to maturity or pursuant to
repurchase agreements, and would treat such securities (including repurchase
agreements maturing in more than seven days) as illiquid for purposes of its
limitation on investment in illiquid securities.
Bank Obligations. Investments in bank obligations are limited to those of
U.S. banks (including their foreign branches) which have total assets at the
time of purchase in excess of $1 billion and the deposits of which are insured
by either the Bank Insurance Fund or the Savings Association Insurance Fund of
the Federal Deposit Insurance Corporation, and foreign banks (including their
U.S. branches) having total assets in excess of $10 billion (or the equivalent
in other currencies), and such other U.S. and foreign commercial banks which are
judged by the advisers to meet comparable credit standing criteria.
Bank obligations include negotiable certificates of deposit, bankers'
acceptances, fixed time deposits and deposit notes. A certificate of deposit is
a short-term negotiable certificate issued by a commercial bank against funds
deposited in the bank and is either interest-bearing or purchased on a discount
basis. A bankers' acceptance is a short-term draft drawn on a commercial bank by
a borrower, usually in connection with an international
4
<PAGE>
commercial transaction. The borrower is liable for payment as is the bank, which
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Fixed time deposits are obligations of branches of United States banks or
foreign banks which are payable at a stated maturity date and bear a fixed rate
of interest. Although fixed time deposits do not have a market, there are no
contractual restrictions on the right to transfer a beneficial interest in the
deposit to a third party. Fixed time deposits subject to withdrawal penalties
and with respect to which a Fund or Portfolio cannot realize the proceeds
thereon within seven days are deemed "illiquid" for the purposes of its
restriction on investments in illiquid securities. Deposit notes are notes
issued by commercial banks which generally bear fixed rates of interest and
typically have original maturities ranging from eighteen months to five years.
Banks are subject to extensive governmental regulations that may limit
both the amounts and types of loans and other financial commitments that may be
made and the interest rates and fees that may be charged. The profitability of
this industry is largely dependent upon the availability and cost of capital
funds for the purpose of financing lending operations under prevailing money
market conditions. Also, general economic conditions play an important part in
the operations of this industry and exposure to credit losses arising from
possible financial difficulties of borrowers might affect a bank's ability to
meet its obligations. Bank obligations may be general obligations of the parent
bank or may be limited to the issuing branch by the terms of the specific
obligations or by government regulation. Investors should also be aware that
securities of foreign banks and foreign branches of United States banks may
involve foreign investment risks in addition to those relating to domestic bank
obligations.
Depositary Receipts. A Fund or Portfolio will limit its investment in
Depository Receipts not sponsored by the issuer of the underlying security to no
more than 5% of the value of its net assets (at the time of investment). A
purchaser of an unsponsored Depositary Receipt may not have unlimited voting
rights and may not receive as much information about the issuer of the
underlying securities as with a sponsored Depositary Receipt.
ECU Obligations. The specific amounts of currencies comprising the ECU
may be adjusted by the Council of Ministers of the European Community to reflect
changes in relative values of the underlying currencies. The Trustees do not
believe that such adjustments will adversely affect holders of ECU-denominated
securities or the marketability of such securities.
Supranational Obligations. Supranational organizations, include
organizations such as The World Bank, which was chartered to finance development
projects in developing member countries; the European Community, which is a
twelve-nation organization engaged in cooperative economic activities; the
European Coal and Steel Community, which is an economic union of various
European nations steel and coal industries; and the Asian Development Bank,
which is an international development bank established to lend funds, promote
investment and provide technical assistance to member nations of the Asian and
Pacific regions.
Corporate Reorganizations. In general, securities that are the subject of
a tender or exchange offer or proposal sell at a premium to their historic
market price immediately prior to the announcement of the offer or proposal. The
increased market price of these securities may also discount what the stated or
appraised value of the security would be if the contemplated action were
approved or consummated. These investments may be advantageous when the discount
significantly overstates the risk of the contingencies involved; significantly
undervalues the securities, assets or cash to be received by shareholders of the
prospective portfolio company as a result of the contemplated transaction; or
fails adequately to recognize the possibility that the offer or proposal may be
replaced or superseded by an offer or proposal of greater value. The evaluation
of these contingencies requires unusually broad knowledge and experience on the
part of the advisers that must appraise not only the value of the issuer and its
component businesses as well as the assets or securities to be received as a
result of the contemplated transaction, but also the financial resources and
business motivation of the offeror as well as the dynamics of the business
climate when the offer or proposal is in progress. Investments in reorganization
securities may tend to increase the turnover ratio of a Fund and increase its
brokerage and other transaction expenses.
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Warrants and Rights. Warrants basically are options to purchase equity
securities at a specified price for a specific period of time. Their prices do
not necessarily move parallel to the prices of the underlying securities. Rights
are similar to warrants but normally have a shorter duration and are distributed
directly by the issuer to shareholders. Rights and warrants have no voting
rights, receive no dividends and have no rights with respect to the assets of
the issuer.
Commercial Paper. Commercial paper consists of short-term (usually from 1
to 270 days) unsecured promissory notes issued by corporations in order to
finance their current operations. A variable amount master demand note (which is
a type of commercial paper) represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender pursuant to which the lender
may determine to invest varying amounts.
Repurchase Agreements. A Fund or Portfolio will enter into repurchase
agreements only with member banks of the Federal Reserve System and securities
dealers believed creditworthy, and only if fully collateralized by securities in
which such Fund or Portfolio is permitted to invest. Under the terms of a
typical repurchase agreement, a Fund or Portfolio would acquire an underlying
instrument for a relatively short period (usually not more than one week)
subject to an obligation of the seller to repurchase the instrument and the Fund
or Portfolio to resell the instrument at a fixed price and time, thereby
determining the yield during the Fund's or Portfolio's holding period. This
procedure results in a fixed rate of return insulated from market fluctuations
during such period. A repurchase agreement is subject to the risk that the
seller may fail to repurchase the security. Repurchase agreements are considered
under the 1940 Act to be loans collateralized by the underlying securities. All
repurchase agreements entered into by a Fund or Portfolio will be fully
collateralized at all times during the period of the agreement in that the value
of the underlying security will be at least equal to the amount of the loan,
including the accrued interest thereon, and the Fund or Portfolio or its
custodian or sub-custodian will have possession of the collateral, which the
Board of Trustees believes will give it a valid, perfected security interest in
the collateral. Whether a repurchase agreement is the purchase and sale of a
security or a collateralized loan has not been conclusively established. This
might become an issue in the event of the bankruptcy of the other party to the
transaction. In the event of default by the seller under a repurchase agreement
construed to be a collateralized loan, the underlying securities would not be
owned by the Fund or Portfolio, but would only constitute collateral for the
seller's obligation to pay the repurchase price. Therefore, a Fund or Portfolio
may suffer time delays and incur costs in connection with the disposition of the
collateral. The Board of Trustees believes that the collateral underlying
repurchase agreements may be more susceptible to claims of the seller's
creditors than would be the case with securities owned by a Fund or Portfolio.
Repurchase agreements maturing in more than seven days are treated as illiquid
for purposes of the Funds' and Portfolios' restrictions on purchases of illiquid
securities. Repurchase agreements are also subject to the risks described below
with respect to stand-by commitments.
Forward Commitments. In order to invest a Fund's assets immediately, while
awaiting delivery of securities purchased on a forward commitment basis,
short-term obligations that offer same-day settlement and earnings will normally
be purchased. When a commitment to purchase a security on a forward commitment
basis is made, procedures are established consistent with the General Statement
of Policy of the Securities and Exchange Commission concerning such purchases.
Since that policy currently recommends that an amount of the respective Fund's
or Portfolio's assets equal to the amount of the purchase be held aside or
segregated to be used to pay for the commitment, a separate account of such Fund
or Portfolio consisting of cash, cash equivalents or high quality debt
securities equal to the amount of such Fund's or Portfolio's commitments
securities will be established at such Fund's or Portfolio's custodian bank. For
the purpose of determining the adequacy of the securities in the account, the
deposited securities will be valued at market value. If the market value of such
securities declines, additional cash, cash equivalents or highly liquid
securities will be placed in the account daily so that the value of the account
will equal the amount of such commitments by the respective Fund or Portfolio.
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Although it is not intended that such purchases would be made for
speculative purposes, purchases of securities on a forward commitment basis may
involve more risk than other types of purchases. Securities purchased on a
forward commitment basis and the securities held in the respective Fund's or
Portfolio's portfolio are subject to changes in value based upon the public's
perception of the issuer and changes, real or anticipated, in the level of
interest rates. Purchasing securities on a forward commitment basis can involve
the risk that the yields available in the market when the delivery takes place
may actually be higher or lower than those obtained in the transaction itself.
On the settlement date of the forward commitment transaction, the respective
Fund or Portfolio will meet its obligations from then available cash flow, sale
of securities held in the separate account, sale of other securities or,
although it would not normally expect to do so, from sale of the forward
commitment securities themselves (which may have a value greater or lesser than
such Fund's or Portfolio's payment obligations). The sale of securities to meet
such obligations may result in the realization of capital gains or losses.
To the extent a Fund or Portfolio engages in forward commitment
transactions, it will do so for the purpose of acquiring securities consistent
with its investment objective and policies and not for the purpose of investment
leverage, and settlement of such transactions will be within 90 days from the
trade date.
Floating and Variable Rate Securities; Participation Certificates. The
securities in which certain Funds and Portfolios may be invested include
participation certificates issued by a bank, insurance company or other
financial institution in securities owned by such institutions or affiliated
organizations ("Participation Certificates"). A Participation Certificate gives
a Fund or Portfolio an undivided interest in the security in the proportion that
the Fund's or Portfolio's participation interest bears to the total principal
amount of the security and generally provides the demand feature described
below. Each Participation Certificate is backed by an irrevocable letter of
credit or guaranty of a bank (which may be the bank issuing the Participation
Certificate, a bank issuing a confirming letter of credit to that of the issuing
bank, or a bank serving as agent of the issuing bank with respect to the
possible repurchase of the Participation Certificate) or insurance policy of an
insurance company that the Board of Trustees of the Trust has determined meets
the prescribed quality standards for a particular Fund or Portfolio.
A Fund or Portfolio may have the right to sell the Participation
Certificate back to the institution and draw on the letter of credit or
insurance on demand after the prescribed notice period, for all or any part of
the full principal amount of the Fund's or Portfolio's participation interest in
the security, plus accrued interest. The institutions issuing the Participation
Certificates would retain a service and letter of credit fee and a fee for
providing the demand feature, in an amount equal to the excess of the interest
paid on the instruments over the negotiated yield at which the Participation
Certificates were purchased by a Fund or Portfolio. The total fees would
generally range from 5% to 15% of the applicable prime rate or other short-term
rate index. With respect to insurance, a Fund or Portfolio will attempt to have
the issuer of the participation certificate bear the cost of any such insurance,
although the Funds and Portfolios retain the option to purchase insurance if
deemed appropriate. Obligations that have a demand feature permitting a Fund or
Portfolio to tender the obligation to a foreign bank may involve certain risks
associated with foreign investment. A Fund's or Portfolio's ability to receive
payment in such circumstances under the demand feature from such foreign banks
may involve certain risks such as future political and economic developments,
the possible establishments of laws or restrictions that might adversely affect
the payment of the bank's obligations under the demand feature and the
difficulty of obtaining or enforcing a judgment against the bank.
The advisers have been instructed by the Board of Trustees to monitor on
an ongoing basis the pricing, quality and liquidity of the floating and variable
rate securities held by the Funds and Portfolios, including Participation
Certificates, on the basis of published financial information and reports of the
rating agencies and other bank analytical services to which the Funds and
Portfolios may subscribe. Although these instruments may be sold by a Fund or
Portfolio, it is intended that they be held until maturity.
Past periods of high inflation, together with the fiscal measures adopted
to attempt to deal with it, have seen wide fluctuations in interest rates,
particularly "prime rates" charged by banks. While the value of the underlying
floating or variable rate securities may change with changes in interest rates
generally, the floating or variable rate nature of the underlying floating or
variable rate securities should minimize changes in value of the instruments.
Accordingly, as interest rates decrease or increase, the potential for capital
appreciation and the risk of potential capital depreciation is less than would
be the case with a portfolio of fixed rate securities. A Fund's or Portfolio's
portfolio may contain floating or variable rate securities on which stated
minimum or maximum rates, or maximum rates set by state law, limit the degree to
which
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interest on such floating or variable rate securities may fluctuate; to the
extent it does, increases or decreases in value may be somewhat greater than
would be the case without such limits. Because the adjustment of interest rates
on the floating or variable rate securities is made in relation to movements of
the applicable banks' "prime rates" or other short-term rate adjustment indices,
the floating or variable rate securities are not comparable to long-term fixed
rate securities. Accordingly, interest rates on the floating or variable rate
securities may be higher or lower than current market rates for fixed rate
obligations of comparable quality with similar maturities.
The maturity of variable rate securities is deemed to be the longer of (i)
the notice period required before a Fund or Portfolio is entitled to receive
payment of the principal amount of the security upon demand or (ii) the period
remaining until the security's next interest rate adjustment.
Reverse Repurchase Agreements. Reverse Repurchase Agreements involve the
sale of securities held by a Fund or Portfolio with an agreement to repurchase
the securities at an agreed upon price and date. The repurchase price is
generally equal to the original sales price plus interest. Reverse repurchase
agreements are usually for seven days or less and cannot be repaid prior to
their expiration dates. Reverse repurchase agreements involve the risk that the
market value of the portfolio securities transferred may decline below the price
at which the Fund or Portfolio is obliged to purchase the securities.
Zero Coupon, Payment-in-Kind and Stripped Obligations. The principal and
interest components of United States Treasury bonds with remaining maturities of
longer than ten years are eligible to be traded independently under the Separate
Trading of Registered Interest and Principal of Securities ("STRIPS") program.
Under the STRIPS program, the principal and interest components are separately
issued by the United States Treasury at the request of depository financial
institutions, which then trade the component parts separately. The interest
component of STRIPS may be more volatile than that of United States Treasury
bills with comparable maturities.
Zero coupon obligations are sold at a substantial discount from their
value at maturity and, when held to maturity, their entire return, which
consists of the amortization of discount, comes from the difference between
their purchase price and maturity value. Because interest on a zero coupon
obligation is not distributed on a current basis, the obligation tends to be
subject to greater price fluctuations in response to changes in interest rates
than are ordinary interest-paying securities with similar maturities. The value
of zero coupon obligations appreciates more than such ordinary interest-paying
securities during periods of declining interest rates and depreciates more than
such ordinary interest-paying securities during periods of rising interest
rates. Under the stripped bond rules of the Internal Revenue Code of 1986, as
amended, investments by a Fund or Portfolio in zero coupon obligations will
result in the accrual of interest income on such investments in advance of the
receipt of the cash corresponding to such income.
Zero coupon securities may be created when a dealer deposits a U.S.
Treasury or federal agency security with a custodian and then sells the coupon
payments and principal payment that will be generated by this security
separately. Proprietary receipts, such as Certificates of Accrual on Treasury
Securities, Treasury Investment Growth Receipts and generic Treasury Receipts,
are examples of stripped U.S. Treasury securities separated into their component
parts through such custodial arrangements.
Payment-in-kind ("PIK") bonds are debt obligations which provide that the
issuer thereof may, at its option, pay interest on such bonds in cash or in the
form of additional debt obligations. Such investments benefit the issuer by
mitigating its need for cash to meet debt service, but also require a higher
rate of return to attract investors who are willing to defer receipt of such
cash. Such investments experience greater volatility in market value due to
changes in interest rates than debt obligations which provide for regular
payments of interest. A Fund or Portfolio will accrue income on such investments
for tax and accounting purposes, as required, which is distributable to
shareholders and which, because no cash is received at the time of accrual, may
require the liquidation of other portfolio securities to satisfy the Fund's or
Portfolio's distribution obligations.
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Illiquid Securities. For purposes of its limitation on investments in
illiquid securities, each Fund and Portfolio may elect to treat as liquid, in
accordance with procedures established by the Board of Trustees, certain
investments in restricted securities for which there may be a secondary market
of qualified institutional buyers as contemplated by Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act") and commercial
obligations issued in reliance on the so-called "private placement" exemption
from registration afforded by Section 4(2) of the Securities Act ("Section 4(2)
paper"). Rule 144A provides an exemption from the registration requirements of
the Securities Act for the resale of certain restricted securities to qualified
institutional buyers. Section 4(2) paper is restricted as to disposition under
the federal securities laws, and generally is sold to institutional investors
such as a Fund or Portfolio who agree that they are purchasing the paper for
investment and not with a view to public distribution. Any resale of Section
4(2) paper by the purchaser must be in an exempt transaction.
One effect of Rule 144A and Section 4(2) is that certain restricted
securities may now be liquid, though there is no assurance that a liquid market
for Rule 144A securities or Section 4(2) paper will develop or be maintained.
The Trustees have adopted policies and procedures for the purpose of determining
whether securities that are eligible for resale under Rule 144A and Section 4(2)
paper are liquid or illiquid for purposes of the limitation on investment in
illiquid securities. Pursuant to those policies and procedures, the Trustees
have delegated to the advisers the determination as to whether a particular
instrument is liquid or illiquid, requiring that consideration be given to,
among other things, the frequency of trades and quotes for the security, the
number of dealers willing to sell the security and the number of potential
purchasers, dealer undertakings to make a market in the security, the nature of
the security and the time needed to dispose of the security. The Trustees will
periodically review the Funds' and Portfolios' purchases and sales of Rule 144A
securities and Section 4(2) paper.
Stand-By Commitments. In a put transaction, a Fund or Portfolio acquires
the right to sell a security at an agreed upon price within a specified period
prior to its maturity date, and a stand-by commitment entitles a Fund or
Portfolio to same-day settlement and to receive an exercise price equal to the
amortized cost of the underlying security plus accrued interest, if any, at the
time of exercise. Stand-by commitments are subject to certain risks, which
include the inability of the issuer of the commitment to pay for the securities
at the time the commitment is exercised, the fact that the commitment is not
marketable by a Fund or Portfolio, and that the maturity of the underlying
security will generally be different from that of the commitment.
Securities Loans. To the extent specified in its Prospectus, each Fund and
Portfolio is permitted to lend its securities to broker-dealers and other
institutional investors in order to generate additional income. Such loans of
portfolio securities may not exceed 30% of the value of a Fund's or Portfolio's
total assets. In connection with such loans, a Fund or Portfolio will receive
collateral consisting of cash, cash equivalents, U.S. Government securities or
irrevocable letters of credit issued by financial institutions. Such collateral
will be maintained at all times in an amount equal to at least 102% of the
current market value plus accrued interest of the securities loaned. A Fund or
Portfolio can increase its income through the investment of such collateral. A
Fund or Portfolio continues to be entitled to the interest payable or any
dividend-equivalent payments received on a loaned security and, in addition, to
receive interest on the amount of the loan. However, the receipt of any
dividend-equivalent payments by a Fund or Portfolio on a loaned security from
the borrower will not qualify for the dividends-received deduction. Such loans
will be terminable at any time upon specified notice. A Fund or Portfolio might
experience risk of loss if the institutions with which it has engaged in
portfolio loan transactions breach their agreements with such Fund or Portfolio.
The risks in lending portfolio securities, as with other extensions of secured
credit, consist of possible delays in receiving additional collateral or in the
recovery of the securities or possible loss of rights in the collateral should
the borrower experience financial difficulty. Loans will be made only to firms
deemed by the advisers to be of good standing and will not be made unless, in
the judgment of the advisers, the consideration to be earned from such loans
justifies the risk.
Additional Policies Regarding Derivative and Related
Transactions Introduction
Introduction. As explained more fully below, the Funds and Portfolios may
employ derivative and related instruments as tools in the management of
portfolio assets. Put briefly, a "derivative" instrument may be considered a
security or other instrument which derives its value from the value or
performance of other instruments or assets, interest or currency exchange rates,
or indexes. For instance, derivatives include futures, options, forward
contracts, structured notes and various over-the-counter instruments.
Like other investment tools or techniques, the impact of using derivatives
strategies or similar instruments depends to a great extent on how they are
used. Derivatives are generally used by portfolio managers in three ways: First,
to reduce risk by hedging (offsetting) an investment position. Second, to
substitute for another security particularly where it is quicker, easier and
less expensive to invest in derivatives. Lastly, to speculate or enhance
portfolio performance. When used prudently, derivatives can offer several
benefits, including easier and more effective hedging, lower transaction costs,
quicker investment and more profitable use of portfolio assets. However,
derivatives also have the potential to significantly magnify risks, thereby
leading to potentially greater losses for a Fund or Portfolio.
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Each Fund and Portfolio may invest its assets in derivative and related
instruments subject only to the Fund's or Portfolio's investment objective and
policies and the requirement that the Fund or Portfolio maintain segregated
accounts consisting of liquid assets, such as cash, U.S. Government securities,
or other high-grade debt obligations (or, as permitted by applicable regulation,
enter into certain offsetting positions) to cover its obligations under such
instruments with respect to positions where there is no underlying portfolio
asset so as to avoid leveraging the Fund or Portfolio.
The value of some derivative or similar instruments in which the Funds or
Portfolios may invest may be particularly sensitive to changes in prevailing
interest rates or other economic factors, and--like other investments of the
Funds and Portfolios --the ability of a Fund or Portfolio to successfully
utilize these instruments may depend in part upon the ability of the advisers to
forecast interest rates and other economic factors correctly. If the advisers
inaccurately forecast such factors and has taken positions in derivative or
similar instruments contrary to prevailing market trends, a Fund or Portfolio
could be exposed to the risk of a loss. The Funds and Portfolios might not
employ any or all of the strategies described herein, and no assurance can be
given that any strategy used will succeed.
Set forth below is an explanation of the various derivatives strategies
and related instruments the Funds or Portfolios may employ along with risks or
special attributes associated with them. This discussion is intended to
supplement the Funds' current prospectuses as well as provide useful information
to prospective investors.
Risk Factors
As explained more fully below and in the discussions of particular
strategies or instruments, there are a number of risks associated with the use
of derivatives and related instruments. There can be no guarantee that there
will be a correlation between price movements in a hedging vehicle and in the
portfolio assets being hedged. An incorrect correlation could result in a loss
on both the hedged assets in a Fund or Portfolio and the hedging vehicle so that
the portfolio return might have been greater had hedging not been attempted.
This risk is particularly acute in the case of "cross-hedges" between
currencies. The advisers may inaccurately forecast interest rates, market values
or other economic factors in utilizing a derivatives strategy. In such a case, a
Fund or Portfolio may have been in a better position had it not entered into
such strategy. Hedging strategies, while reducing risk of loss, can also reduce
the opportunity for gain. In other words, hedging usually limits both potential
losses as well as potential gains. Strategies not involving hedging may increase
the risk to a Fund or Portfolio. Certain strategies, such as yield enhancement,
can have speculative characteristics and may result in more risk to a Fund or
Portfolio than hedging strategies using the same instruments. There can be no
assurance that a liquid market will exist at a time when a Fund or Portfolio
seeks to close out an option, futures contract or other derivative or related
position. Many exchanges and boards of trade limit the amount of fluctuation
permitted in option or futures contract prices during a single day; once the
daily limit has been reached on particular contract, no trades may be made that
day at a price beyond that limit. In addition, certain instruments are
relatively new and without a significant trading history. As a result, there is
no assurance that an active secondary market will develop or continue to exist.
Finally, over-the-counter instruments typically do not have a liquid market.
Lack of a liquid market for any reason may prevent a Fund from liquidating an
unfavorable position. Activities of large traders in the futures and securities
markets involving arbitrage, "program trading," and other investment strategies
may cause price distortions in these markets. In certain instances, particularly
those involving over-the-counter transactions, forward contracts there is a
greater potential that a counterparty or broker may default or be unable to
perform on its commitments. In the event of such a default, a Fund or Portfolio
may experience a loss. In transactions involving currencies, the value of the
currency underlying an instrument may fluctuate due to many factors, including
economic conditions, interest rates, governmental policies and market forces.
Specific Uses and Strategies
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Set forth below are explanations of various strategies involving
derivatives and related instruments which may be used by a Fund or Portfolio.
Options on Securities, Securities Indexes and Debt Instruments. A Fund or
Portfolio may PURCHASE, SELL or EXERCISE call and put options on (i) securities,
(ii) securities indexes, and (iii) debt instruments.
Although in most cases these options will be exchange-traded, the Funds
and Portfolios may also purchase, sell or exercise over-the-counter options.
Over-the-counter options differ from exchange-traded options in that they are
two-party contracts with price and other terms negotiated between buyer and
seller. As such, over-the-counter options generally have much less market
liquidity and carry the risk of default or nonperformance by the other party.
One purpose of purchasing put options is to protect holdings in an
underlying or related security against a substantial decline in market value.
One purpose of purchasing call options is to protect against substantial
increases in prices of securities the Fund intends to purchase pending its
ability to invest in such securities in an orderly manner. A Fund or Portfolio
may also use combinations of options to minimize costs, gain exposure to markets
or take advantage of price disparities or market movements. For example, a Fund
or Portfolio may sell put or call options it has previously purchased or
purchase put or call options it has previously sold. These transactions may
result in a net gain or loss depending on whether the amount realized on the
sale is more or less than the premium and other transaction costs paid on the
put or call option which is sold. A Fund or Portfolio may write a call or put
option in order to earn the related premium from such transactions. Prior to
exercise or expiration, an option may be closed out by an offsetting purchase or
sale of a similar option. The Funds will not write uncovered options.
In addition to the general risk factors noted above, the purchase and
writing of options involve certain special risks. During the option period, a
Fund or Portfolio writing a covered call (i.e., where the underlying securities
are held by the Fund or Portfolio) has, in return for the premium on the option,
given up the opportunity to profit from a price increase in the underlying
securities above the exercise price, but has retained the risk of loss should
the price of the underlying securities decline. The writer of an option has no
control over the time when it may be required to fulfill its obligation as a
writer of the option. Once an option writer has received an exercise notice, it
cannot effect a closing purchase transaction in order to terminate its
obligation under the option and must deliver the underlying securities at the
exercise price.
If a put or call option purchased by a Fund or Portfolio is not sold when
it has remaining value, and if the market price of the underlying security, in
the case of a put, remains equal to or greater than the exercise price or , in
the case of a call, remains less than or equal to the exercise price, such Fund
or Portfolio will lose its entire investment in the option. Also, where a put or
call option on a particular security is purchased to hedge against price
movements in a related security, the price of the put or call option may move
more or less than the price of the related security. There can be no assurance
that a liquid market will exist when a Fund or Portfolio seeks to close out an
option position. Furthermore, if trading restrictions or suspensions are imposed
on the options markets, a Fund or Portfolio may be unable to close out a
position.
Futures Contracts and Options on Futures Contracts. A Fund or Portfolio
may purchase or sell (i) interest-rate futures contracts, (ii) futures contracts
on specified instruments or indices, and (iii) options on these futures
contracts ("futures options").
The futures contracts and futures options may be based on various
instruments or indices in which the Funds and Portfolios may invest such as
foreign currencies, certificates of deposit, Eurodollar time deposits,
securities indices, economic indices (such as the Consumer Price Indices
compiled by the U.S. Department of Labor).
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Futures contracts and futures options may be used to hedge portfolio
positions and transactions as well as to gain exposure to markets. For example,
a Fund or Portfolio may sell a futures contract--or buy a futures option--to
protect against a decline in value, or reduce the duration, of portfolio
holdings. Likewise, these instruments may be used where a Fund or Portfolio
intends to acquire an instrument or enter into a position. For example, a Fund
or Portfolio may purchase a futures contract--or buy a futures option--to gain
immediate exposure in a market or otherwise offset increases in the purchase
price of securities or currencies to be acquired in the future. Futures options
may also be written to earn the related premiums.
When writing or purchasing options, the Funds and Portfolios may
simultaneously enter into other transactions involving futures contracts or
futures options in order to minimize costs, gain exposure to markets, or take
advantage of price disparities or market movements. Such strategies may entail
additional risks in certain instances. The Funds and Portfolios may engage in
cross-hedging by purchasing or selling futures or options on a security or
currency different from the security or currency position being hedged to take
advantage of relationships between the two securities or currencies.
Investments in futures contracts and options thereon involve risks similar
to those associated with options transactions discussed above. The Funds and
Portfolios will only enter into futures contracts or options on futures
contracts which are traded on a U.S. or foreign exchange or board of trade, or
similar entity, or quoted on an automated quotation system.
Forward Contracts. A Fund and Portfolio may use foreign currency and
interest-rate forward contracts for various purposes as described below.
Foreign currency exchange rates may fluctuate significantly over short
periods of time. They generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of investments in
different countries, actual or perceived changes in interest rates and other
complex factors, as seen from an international perspective. A Fund or Portfolio
that may invest in securities denominated in foreign currencies may, in addition
to buying and selling foreign currency futures contracts and options on foreign
currencies and foreign currency futures, enter into forward foreign currency
exchange contracts to reduce the risks or otherwise take a position in
anticipation of changes in foreign exchange rates. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be a fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
By entering into a forward foreign currency contract, a Fund or Portfolio "locks
in" the exchange rate between the currency it will deliver and the currency it
will receive for the duration of the contract. As a result, a Fund or Portfolio
reduces its exposure to changes in the value of the currency it will deliver and
increases its exposure to changes in the value of the currency it will exchange
into. The effect on the value of a Fund or Portfolio is similar to selling
securities denominated in one currency and purchasing securities denominated in
another. Transactions that use two foreign currencies are sometimes referred to
as "cross- hedges."
A Fund or Portfolio may enter into these contracts for the purpose of
hedging against foreign exchange risk arising from the Fund's or Portfolio'
investments or anticipated investments in securities denominated in foreign
currencies. A Fund or Portfolio may also enter into these contracts for purposes
of increasing exposure to a foreign currency or to shift exposure to foreign
currency fluctuations from one country to another.
A Fund or Portfolio may also use forward contracts to hedge against
changes in interest rates, increase exposure to a market or otherwise take
advantage of such changes. An interest-rate forward contract involves the
obligation to purchase or sell a specific debt instrument at a fixed price at a
future date.
Interest Rate and Currency Transactions. A Fund or Portfolio may employ
currency and interest rate management techniques, including transactions in
options (including yield curve options), futures, options on futures, forward
foreign currency exchange contracts, currency options and futures and currency
and interest rate swaps. The
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aggregate amount of a Fund's or Portfolio's net currency exposure will not
exceed the total net asset value of its portfolio. However, to the extent that a
Fund or Portfolio is fully invested while also maintaining currency positions,
it may be exposed to greater combined risk.
The Funds and Portfolios will only enter into interest rate and currency
swaps on a net basis, i.e., the two payment streams are netted out, with the
Fund or Portfolio receiving or paying, as the case may be, only the net amount
of the two payments. Interest rate and currency swaps do not involve the
delivery of securities, the underlying currency, other underlying assets or
principal. Accordingly, the risk of loss with respect to interest rate and
currency swaps is limited to the net amount of interest or currency payments
that a Fund or Portfolio is contractually obligated to make. If the other party
to an interest rate or currency swap defaults, a Fund's or Portfolio's risk of
loss consists of the net amount of interest or currency payments that the Fund
or Portfolio is contractually entitled to receive. Since interest rate and
currency swaps are individually negotiated, the Funds and Portfolios expect to
achieve an acceptable degree of correlation between their portfolio investments
and their interest rate or currency swap positions.
A Fund or Portfolio may hold foreign currency received in connection with
investments in foreign securities when it would be beneficial to convert such
currency into U.S. dollars at a later date, based on anticipated changes in the
relevant exchange rate.
A Fund or Portfolio may purchase or sell without limitation as to a
percentage of its assets forward foreign currency exchange contracts when the
advisers anticipate that the foreign currency will appreciate or depreciate in
value, but securities denominated in that currency do not present attractive
investment opportunities and are not held by such Fund or Portfolio. In
addition, a Fund or Portfolio may enter into forward foreign currency exchange
contracts in order to protect against adverse changes in future foreign currency
exchange rates. A Fund or Portfolio may engage in cross-hedging by using forward
contracts in one currency to hedge against fluctuations in the value of
securities denominated in a different currency if its advisers believe that
there is a pattern of correlation between the two currencies. Forward contracts
may reduce the potential gain from a positive change in the relationship between
the U.S. Dollar and foreign currencies. Unanticipated changes in currency prices
may result in poorer overall performance for a Fund or Portfolio than if it had
not entered into such contracts. The use of foreign currency forward contracts
will not eliminate fluctuations in the underlying U.S. dollar equivalent value
of the prices of or rates of return on a Fund's or Portfolio's foreign currency
denominated portfolio securities and the use of such techniques will subject the
Fund or Portfolio to certain risks.
The matching of the increase in value of a forward contract and the
decline in the U.S. dollar equivalent value of the foreign currency denominated
asset that is the subject of the hedge generally will not be precise. In
addition, a Fund or Portfolio may not always be able to enter into foreign
currency forward contracts at attractive prices, and this will limit a Fund's or
Portfolio's ability to use such contract to hedge or cross-hedge its assets.
Also, with regard to a Fund's or Portfolio's use of cross-hedges, there can be
no assurance that historical correlations between the movement of certain
foreign currencies relative to the U.S. dollar will continue. Thus, at any time
poor correlation may exist between movements in the exchange rates of the
foreign currencies underlying a Fund's or Portfolio's cross-hedges and the
movements in the exchange rates of the foreign currencies in which the Fund's or
Portfolio's assets that are the subject of such cross-hedges are denominated.
A Fund or Portfolio may enter into interest rate and currency swaps to the
maximum allowed limits under applicable law. A Fund or Portfolio will typically
use interest rate swaps to shorten the effective duration of its portfolio.
Interest rate swaps involve the exchange by a Fund or Portfolio with another
party of their respective commitments to pay or receive interest, such as an
exchange of fixed rate payments for floating rate payments. Currency swaps
involve the exchange of their respective rights to make or receive payments in
specified currencies.
Mortgage-Related Securities. A Fund or Portfolio may purchase
mortgage-backed securities--i.e., securities representing an ownership interest
in a pool of mortgage loans issued by lenders such as mortgage bankers,
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commercial banks and savings and loan associations. Mortgage loans included in
the pool--but not the security itself--may be insured by the Government
National Mortgage Association or the Federal Housing Administration or
guaranteed by the Federal National Mortgage Association, the Federal Home Loan
Mortgage Corporation or the Veterans Administration. Mortgage-backed securities
provide investors with payments consisting of both interest and principal as the
mortgages in the underlying mortgage pools are paid off. Although providing the
potential for enhanced returns, mortgage-backed securities can also be volatile
and result in unanticipated losses.
The average life of a mortgage-backed security is likely to be
substantially less than the original maturity of the mortgage pools underlying
the securities. Prepayments of principal by mortgagors and mortgage foreclosures
will usually result in the return of the greater part of the principal invested
far in advance of the maturity of the mortgages in the pool. The actual rate of
return of a mortgage-backed security may be adversely affected by the prepayment
of mortgages included in the mortgage pool underlying the security.
A Fund or Portfolio may also invest in securities representing interests
in collateralized mortgage obligations ("CMOs"), real estate mortgage investment
conduits ("REMICs") and in pools of certain other asset-backed bonds and
mortgage pass-through securities. Like a bond, interest and prepaid principal
are paid, in most cases, monthly. CMOs may be collateralized by whole mortgage
loans but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by the U.S. Government, or U.S.
Government-related entities, and their income streams.
CMOs are structured into multiple classes, each bearing a different stated
maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. Monthly payment of principal received from the
pool of underlying mortgages, including prepayments, are allocated to different
classes in accordance with the terms of the instruments, and changes in
prepayment rates or assumptions may significantly affect the expected average
life and value of a particular class.
REMICs include governmental and/or private entities that issue a fixed
pool of mortgages secured by an interest in real property. REMICs are similar to
CMOs in that they issue multiple classes of securities. REMICs issued by private
entities are not U.S. Government securities and are not directly guaranteed by
any government agency. They are secured by the underlying collateral of the
private issuer.
The advisers expect that governmental, government-related or private
entities may create mortgage loan pools and other mortgage-related securities
offering mortgage pass-through and mortgage-collateralized investments in
addition to those described above. The mortgages underlying these securities may
include alternative mortgage instruments, that is, mortgage instruments whose
principal or interest payments may vary or whose terms to maturity may differ
from customary long-term fixed-rate mortgages. A Fund or Portfolio may also
invest in debentures and other securities of real estate investment trusts. As
new types of mortgage-related securities are developed and offered to investors,
the Funds and Portfolios may consider making investments in such new types of
mortgage-related securities.
Asset-Backed Securities. A Fund or Portfolio may invest in asset-backed
securities, including conditional sales contracts, equipment lease certificates
and equipment trust certificates. The advisers expect that other asset-backed
securities (unrelated to mortgage loans) will be offered to investors in the
future. Several types of asset-backed securities already exist, including, for
example, "Certificates for Automobile ReceivablesSM" or "CARSSM" ("CARS"). CARS
represent undivided fractional interests in a trust whose assets consist of a
pool of motor vehicle retail installment sales contracts and security interests
in the vehicles securing the contracts. Payments of principal and interest on
CARS are passed-through monthly to certificate holders, and are guaranteed up to
certain amounts and for a certain time period by a letter of credit issued by a
financial institution unaffiliated with the trustee or originator of the CARS
trust. An investor's return on CARS may be affected by early prepayment of
principal on the underlying vehicle sales contracts. If the letter of credit is
exhausted, the CARS trust may be prevented from realizing the full amount due on
a sales contract because of state law requirements and restrictions relating to
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foreclosure sales of vehicles and the obtaining of deficiency judgments
following such sales or because of depreciation, damage or loss of a vehicle,
the application of federal and state bankruptcy and insolvency laws, the failure
of servicers to take appropriate steps to perfect the CARS trust's rights in the
underlying loans and the servicer's sale of such loans to bona fide purchasers,
giving rise to interests in such loans superior to those of the CARS trust, or
other factors. As a result, certificate holders may experience delays in
payments or losses if the letter of credit is exhausted. A Fund or Portfolio
also may invest in other types of asset-backed securities. In the selection of
other asset-backed securities, the advisers will attempt to assess the liquidity
of the security giving consideration to the nature of the security, the
frequency of trading in the security, the number of dealers making a market in
the security and the overall nature of the marketplace for the security.
Structured Products. A Fund or Portfolio may invest in interests in
entities organized and operated solely for the purpose of restructuring the
investment characteristics of certain other investments. This type of
restructuring involves the deposit with or purchase by an entity, such as a
corporation or trust, or specified instruments (such as commercial bank loans)
and the issuance by that entity of one or more classes of securities
("structured products") backed by, or representing interests in, the underlying
instruments. The cash flow on the underlying instruments may be apportioned
among the newly issued structured products to create securities with different
investment characteristics such as varying maturities, payment priorities and
interest rate provisions, and the extent of the payments made with respect to
structured products is dependent on the extent of the cash flow on the
underlying instruments. A Fund or Portfolio may invest in structured products
which represent derived investment positions based on relationships among
different markets or asset classes.
A Fund or Portfolio may also invest in other types of structured products,
including, among others, inverse floaters, spread trades and notes linked by a
formula to the price of an underlying instrument. Inverse floaters have coupon
rates that vary inversely at a multiple of a designated floating rate (which
typically is determined by reference to an index rate, but may also be
determined through a dutch auction or a remarketing agent or by reference to
another security) (the "reference rate"). As an example, inverse floaters may
constitute a class of CMOs with a coupon rate that moves inversely to a
designated index, such as LIBOR (London Interbank Offered Rate) or the Cost of
Funds Index. Any rise in the reference rate of an inverse floater (as a
consequence of an increase in interest rates) causes a drop in the coupon rate
while any drop in the reference rate of an inverse floater causes an increase in
the coupon rate. A spread trade is an investment position relating to a
difference in the prices or interest rates of two securities where the value of
the investment position is determined by movements in the difference between the
prices or interest rates, as the case may be, of the respective securities. When
a Fund or Portfolio invests in notes linked to the price of an underlying
instrument, the price of the underlying security is determined by a multiple
(based on a formula) of the price of such underlying security. A structured
product may be considered to be leveraged to the extent its interest rate varies
by a magnitude that exceeds the magnitude of the change in the index rate of
interest. Because they are linked to their underlying markets or securities,
investments in structured products generally are subject to greater volatility
than an investment directly in the underlying market or security. Total return
on the structured product is derived by linking return to one or more
characteristics of the underlying instrument. Because certain structured
products of the type in which a Fund or Portfolio may invest may involve no
credit enhancement, the credit risk of those structured products generally would
be equivalent to that of the underlying instruments. A Fund or Portfolio may
invest in a class of structured products that is either subordinated or
unsubordinated to the right of payment of another class. Subordinated structured
products typically have higher yields and present greater risks than
unsubordinated structured products. Although a Fund's or Portfolio's purchase of
subordinated structured products would have similar economic effect to that of
borrowing against the underlying securities, the purchase will not be deemed to
be leverage for purposes of a Fund's or Portfolio' fundamental investment
limitation related to borrowing and leverage.
Certain issuers of structured products may be deemed to be "investment
companies" as defined in the 1940 Act. As a result, a Fund's investments in
these structured products may be limited by the restrictions contained in the
1940 Act. Structured products are typically sold in private placement
transactions, and there currently is no active trading market for structured
products. As
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a result, certain structured products in which a Fund or Portfolio invests may
be deemed illiquid and subject to its limitation on illiquid investments.
Investments in structured products generally are subject to greater
volatility than an investment directly in the underlying market or security. In
addition, because structured products are typically sold in private placement
transactions, there currently is no active trading market for structured
products.
Additional Restrictions on the Use of Futures and Option Contracts
None of the Funds is a "commodity pool" (i.e., a pooled investment vehicle
which trades in commodity futures contracts and options thereon and the operator
of which is registered with the CFTC and futures contracts and futures options
will be purchased, sold or entered into only for bona fide hedging purposes,
provided that a Fund may enter into such transactions for purposes other than
bona fide hedging if, immediately thereafter, the sum of the amount of its
initial margin and premiums on open contracts and options would not exceed 5% of
the liquidation value of the Fund's portfolio, provided, further, that, in the
case of an option that is in-the-money, the in-the-money amount may be excluded
in calculating the 5% limitation.
When a Fund or Portfolio purchases a futures contract, an amount of cash
or cash equivalents or high quality debt securities will be deposited in a
segregated account with such Fund's or Portfolio's custodian or sub-custodian so
that the amount so segregated, plus the initial deposit and variation margin
held in the account of its broker, will at all times equal the value of the
futures contract, thereby insuring that the use of such futures is unleveraged.
A Fund's or Portfolio's ability to engage in the transactions described
herein may be limited by the current federal income tax requirement that a Fund
or Portfolio derive less than 30% of its gross income from the sale or other
disposition of stock or securities held for less than three months.
Investment Restrictions
The Funds and Portfolios have adopted the following investment
restrictions which may not be changed without approval by a "majority of the
outstanding shares" of a Fund or Portfolio which, as used in this Statement of
Additional Information, means the vote of the lesser of (i) 67% or more of the
shares of a Fund or total beneficial interests of a Portfolio present at a
meeting, if the holders of more than 50% of the outstanding shares of a Fund or
total beneficial interests of a Portfolio are present or represented by proxy,
or (ii) more than 50% of the outstanding shares of a Fund or total beneficial
interests of a Portfolio.
Whenever the Trust is requested to vote on a fundamental policy of a
Portfolio, the Trust will hold a meeting of shareholders of the Fund that
invests in such Portfolio and will cast its votes as instructed by the
shareholders of such Fund.
With respect to the Growth and Income Fund and the Capital Growth Fund, it
is a fundamental policy of each Fund that when the Fund holds no portfolio
securities except interests in the Portfolio in which it invests, the Fund's
investment objective and policies shall be identical to the Portfolio's
investment objective and policies, except for the following: the Fund (1) may
invest more than 5% of its assets in another issuer, (2) may, consistent with
Section 12 of the 1940 Act, invest in securities issued by other registered
investment companies, (3) may invest more than 10% of its net assets in the
securities of a registered investment company, (4) may hold more than 10% of the
voting securities of a registered investment company, (5) will concentrate its
investments in the investment company and (6) will not issue any senior security
(as defined in the 1940 Act), except that (a) a Fund may engage in transactions
that may result in the issuance of senior securities to the extent permitted
under applicable regulations
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and interpretations of the 1940 Act or an exemptive order; (b) a Fund may
acquire other securities, the acquisition of which may result in the issuance of
a senior security, to the extent permitted under applicable regulations or
interpretations of the 1940 Act; and (c) subject to the restrictions set forth
below, a Fund may borrow money as authorized by the 1940 Act. For purposes of
this restriction, collateral arrangements with respect to permissible options
and futures transactions, including deposits of initial and variation margin,
are not considered to be the issuance of a senior security. It is a fundamental
investment policy of each Fund that when the Fund holds only portfolio
securities other than interests in the Portfolio, the Fund's investment
objective and policies shall be identical to the investment objective and
policies of the Portfolio at the time the assets of the Fund were withdrawn from
the Portfolio.
Each Fund and Portfolio may not:
(1) borrow money, except that each Fund and Portfolio may borrow
money for temporary or emergency purposes, or by engaging in reverse
repurchase transactions, in an amount not exceeding 33-1/3% of the value
of its total assets at the time when the loan is made and may pledge,
mortgage or hypothecate no more than 1/3 of its net assets to secure such
borrowings. Any borrowings representing more than 5% of a Fund's or
Portfolio's total assets must be repaid before the Fund or Portfolio may
make additional investments;
(2) make loans, except that each Fund and Portfolio may: (i)
purchase and hold debt instruments (including without limitation, bonds,
notes, debentures or other obligations and certificates of deposit,
bankers' acceptances and fixed time deposits) in accordance with its
investment objectives and policies; (ii) enter into repurchase agreements
with respect to portfolio securities; and (iii) lend portfolio securities
with a value not in excess of one-third of the value of its total assets;
(3) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or repurchase agreements secured thereby) if, as a
result, more than 25% of the Fund's or Portfolio's total assets would be
invested in the securities of companies whose principal business
activities are in the same industry. Notwithstanding the foregoing, with
respect to a Fund's or Portfolio's permissible futures and options
transactions in U.S. Government securities, positions in such options and
futures shall not be subject to this restriction;
(4) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments but this shall not
prevent a Fund or Portfolio from (i) purchasing or selling options and
futures contracts or from investing in securities or other instruments
backed by physical commodities or (ii) engaging in forward purchases or
sales of foreign currencies or securities;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent a
Fund or Portfolio from investing insecurities or other instruments backed
by real estate or securities of companies engaged in the real estate
business). Investments by a Fund or Portfolio in securities backed by
mortgages on real estate or in marketable securities of companies engaged
in such activities are not hereby precluded;
(6) issue any senior security (as defined in the 1940 Act), except
that (a) a Fund or Portfolio may engage in transactions that may result in
the issuance of senior securities to the extent permitted under applicable
regulations and interpretations of the 1940 Act or an exemptive order; (b)
a Fund or Portfolio may acquire other securities, the acquisition of which
may result in the issuance of a senior security, to the extent permitted
under applicable regulations or interpretations of the 1940 Act; and (c)
subject to the restrictions set forth above, a Fund or Portfolio may
borrow money as authorized by the 1940 Act. For purposes of this
restriction, collateral arrangements with respect to permissible options
and futures
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transactions, including deposits of initial and variation margin, are not
considered to be the issuance of a senior security; or
(7) underwrite securities issued by other persons except insofar as
a Fund or Portfolio may technically be deemed to be an underwriter under
the Securities Act of 1933 in selling a portfolio security.
In addition, as a matter of fundamental policy, notwithstanding any other
investment policy or restriction, each Fund may seek to achieve its investment
objective by investing all of its investable assets in another investment
company having substantially the same investment objective and policies as the
Fund. For purposes of investment restriction (5) above, real estate includes
Real Estate Limited Partnerships. For purposes of investment restriction (3)
above, industrial development bonds, where the payment of principal and interest
is the ultimate responsibility of companies within the same industry, are
grouped together as an "industry." Supranational organizations are collectively
considered to be members of a single "industry" for purposes of restriction (3)
above.
In addition, each Fund and Portfolio is subject to the following
nonfundamental restrictions which may be changed without shareholder approval:
(1) Each Fund other than the Capital Growth Fund, Growth and Income
Fund, Small Cap Equity Fund and U.S. Treasury Income Fund may not, with
respect to 75% of its assets, hold more than 10% of the outstanding voting
securities of any issuer or invest more than 5% of its assets in the
securities of any one issuer (other than obligations of the U.S.
Government, its agencies and instrumentalities); Each Portfolio and each
of the Capital Growth Fund, Growth and Income Fund, Small Cap Equity Fund
and U.S. Treasury Income Fund may not, with respect to 50% of its assets,
hold more than 10% of the outstanding voting securities of any issuer.
(2) Each Fund and Portfolio may not make short sales of securities,
other than short sales "against the box," or purchase securities on margin
except for short-term credits necessary for clearance of portfolio
transactions, provided that this restriction will not be applied to limit
the use of options, futures contracts and related options, in the manner
otherwise permitted by the investment restrictions, policies and
investment program of a Fund or Portfolio.
(3) Each Fund and Portfolio may not purchase or sell interests in
oil, gas or mineral leases.
(4) Each Fund and Portfolio may not invest more than 15% of its net
assets in illiquid securities.
(5) Each Fund and Portfolio may not write, purchase or sell any put
or call option or any combination thereof, provided that this shall not
prevent (i) the writing, purchasing or selling of puts, calls or
combinations thereof with respect to portfolio securities or (ii) with
respect to a Fund's or Portfolio's permissible futures and options
transactions, the writing, purchasing, ownership, holding or selling of
futures and options positions or of puts, calls or combinations thereof
with respect to futures.
(6) Each Fund may invest up to 5% of its total assets in the
securities of any one investment company, but may not own more than 3% of
the securities of any one investment company or invest more than 10% of
its total assets in the securities of other investment companies.
It is the Trust's position that proprietary strips, such as CATS and
TIGRS, are United States Government securities. However, the Trust has been
advised that the staff of the Securities and Exchange Commission's Division of
Investment Management does not consider these to be United States Government
securities, as defined under the Investment Company Act of 1940, as amended.
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For purposes of the Funds' and Portfolios' investment restrictions, the
issuer of a tax-exempt security is deemed to be the entity (public or private)
ultimately responsible for the payment of the principal of and interest on the
security.
In order to permit the sale of its shares in certain states, a Fund or
Portfolio may make commitments more restrictive than the investment policies and
limitations described above and in its Prospectus. Should a Fund or Portfolio
determine that any such commitment is no longer in its best interests, it will
revoke the commitment by terminating sales of its shares in the state involved.
In order to comply with certain federal and state statutes and regulatory
policies, as a matter of operating policy, each Fund and Portfolio will not: (i)
invest more than 5% of its assets in companies which, including predecessors,
have a record of less than three years' continuous operation, except for the
Small Cap Equity Fund which may invest up to 15% of its assets in such
companies, (ii) invest in warrants, valued at the lower of cost or market, in
excess of 5% of the value of its net assets, and no more than 2% of such value
may be warrants which are not listed on the New York or American Stock
Exchanges, or (iii) purchase or retain in its portfolio any securities issued by
an issuer any of whose officers, directors, trustees or security holders is an
officer or Trustee of the Trust or Portfolio, or is an officer or director of
the adviser, if after the purchase of the securities of such issuer by the Fund
or Portfolio one or more of such persons owns beneficially more than 1/2 of 1%
of the shares or securities, or both, all taken at market value, of such issuer,
and such persons owning more than 1/2 of 1% of such shares or securities
together own beneficially more than 5% of such shares or securities, or both,
all taken at market value.
If a percentage or rating restriction on investment or use of assets set
forth herein or in a Prospectus is adhered to at the time a transaction is
effected, later changes in percentage resulting from any cause other than
actions by a Fund or Portfolio will not be considered a violation. If the value
of a Fund's or Portfolio's holdings of illiquid securities at any time exceeds
the percentage limitation applicable at the time of acquisition due to
subsequent fluctuations in value or other reasons, the Board of Trustees will
consider what actions, if any, are appropriate to maintain adequate liquidity.
Portfolio Transactions and Brokerage Allocation
Specific decisions to purchase or sell securities for a Fund or Portfolio
are made by a portfolio manager who is an employee of the adviser or sub-adviser
to such Fund or Portfolio and who is appointed and supervised by senior officers
of such adviser or sub-adviser. Changes in a Fund's or Portfolio's investments
are reviewed by the Board of Trustees of the Trust or Portfolio. The port-
folio managers may serve other clients of the advisers in a similar capacity.
The frequency of a Fund's or Portfolio's portfolio transactions -- the
portfolio turnover rate -- will vary from year to year depending upon market
conditions. Because a high turnover rate may increase transaction costs and the
possibility of taxable short-term gains, the advisers will weigh the added costs
of short-term investment against anticipated gains. Each Fund or Portfolio will
engage in portfolio trading if its advisers believe a transaction, net of costs
(including custodian charges), will help it achieve its investment objective.
Funds investing in both equity and debt securities apply this policy with
respect to both the equity and debt portions of their portfolios.
For the fiscal years ended October 31, 1993, 1994 and 1995, the annual
rates of portfolio turnover for the following Funds were as follows:
1993 1994 1995
---- ---- ----
Balanced Fund --- 77% 68%
U.S. Treasury Income Fund 296 163% 164%
Growth and Income Fund 41% * *
Capital Growth Fund 43% * *
Equity Income Fund --- 75% 91%
Bond Fund 20% 17% 30%
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Short-Term Bond Fund 17% 44% 62%
Large Cap Equity Fund 33% 53% 45%
- ---------------------------
* The Growth and Income Fund and the Capital Growth Fund invest all of their
investable assets in their respective Portfolio and do not invest directly
in a portfolio of assets, and therefore do not have reportable portfolio
turnover rates. The portfolio turnover rates for the Growth and Income Portfolio
and the Capital Growth Portfolio for the fiscal year ended October 31, 1994 were
57% and 60%, respectively, and for the fiscal year ended October 31, 1995, the
portfolio turnover rates were 71% and 86%, respectively.
For the period November 4, 1992 through October 31, 1993, the annual
portfolio turnover rate for the Balanced Fund was 65%. For the period July 16,
1993 through October 31, 1993, the Equity Income Fund had a portfolio turnover
rate of 54%. For the period December 20, 1994 through October 31, 1995, the
Small Cap Equity Fund had a portfolio turnover rate of 75%.
For the fiscal period ending October 31, 1996, the annual portfolio
turnover rates for the American Value Fund and U.S. Government Securities Fund
are expected not to exceed 100%.
Under the advisory agreement and the sub-advisory agreements, the adviser
and sub-advisers shall use their best efforts to seek to execute portfolio
transactions at prices which, under the circumstances, result in total costs or
proceeds being the most favorable to the Funds and Portfolios. In assessing the
best overall terms available for any transaction, the adviser and sub-advisers
consider all factors they deem relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, research services provided to the adviser or
sub-advisers, and the reasonableness of the commissions, if any, both for the
specific transaction and on a continuing basis. The adviser and sub-advisers are
not required to obtain the lowest commission or the best net price for any Fund
or Portfolio on any particular transaction, and are not required to execute any
order in a fashion either preferential to any or Portfolio Fund relative to
other accounts they manage or otherwise materially adverse to such other
accounts.
Debt securities are traded principally in the over-the-counter market
through dealers acting on their own account and not as brokers. In the case of
securities traded in the over-the-counter market (where no stated commissions
are paid but the prices include a dealer's markup or markdown), the adviser or
sub-adviser to a Fund or Portfolio normally seeks to deal directly with the
primary market makers unless, in its opinion, best execution is available
elsewhere. In the case of securities purchased from underwriters, the cost of
such securities generally includes a fixed underwriting commission or
concession. From time to time, soliciting dealer fees are available to the
adviser or sub-adviser on the tender of a Fund's or Portfolio's portfolio
securities in so-called tender or exchange offers. Such soliciting dealer fees
are in effect recaptured for a Funds and Portfolios by the adviser and
sub-advisers. At present, no other recapture arrangements are in effect.
Under the advisory and sub-advisory agreements and as permitted by Section
28(e) of the Securities Exchange Act of 1934, the adviser or sub-advisers may
cause the Funds and Portfolios to pay a broker-dealer which provides brokerage
and research services to the adviser or sub-advisers, the Funds or Portfolios
and/or other accounts for which they exercise investment discretion an amount of
commission for effecting a securities transaction for a Fund or Portfolio
in excess of the amount other broker-dealers would have charged for the
transaction if they determine in good faith that the greater commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker-dealer viewed in terms of either a particular
transaction or their overall responsibilities to accounts over which they
exercise investment discretion. Not all of such services are useful or of value
in advising the Funds and Portfolios. The adviser and sub-advisers report to the
Board of Trustees regarding overall commissions paid by the Funds and Portfolios
and their reasonableness in relation to the benefits to the Funds and
Portfolios. The term "brokerage and research services" includes advice as to
the value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or of purchasers or sellers of
securities, furnishing analyses and reports concerning issues, industries,
securities, economic factors and trends,
20
<PAGE>
portfolio strategy and the performance of accounts, and effecting securities
transactions and performing functions incidental thereto such as clearance and
settlement.
The management fees that the Funds and Portfolios pay to the adviser will
not be reduced as a consequence of the adviser's or sub-advisers' receipt of
brokerage and research services. To the extent the Funds' or Portfolios'
portfolio transactions are used to obtain such services, the brokerage
commissions paid by the Funds or Portfolios will exceed those that might
otherwise be paid by an amount which cannot be presently determined. Such
services generally would be useful and of value to the adviser or sub-advisers
in serving one or more of their other clients and, conversely, such services
obtained by the placement of brokerage business of other clients generally would
be useful to the adviser and sub-advisers in carrying out their obligations to
the Funds and Portfolios. While such services are not expected to reduce the
expenses of the adviser or sub-advisers, they advisers would, through use of the
services, avoid the additional expenses which would be incurred if they should
attempt to develop comparable information through their own staffs.
In certain instances, there may be securities that are suitable for one or
more of the Funds and Portfolios as well as one or more of the adviser's or
sub-advisers' other clients. Investment decisions for the Funds and Portfolios
and for other clients are made with a view to achieving their respective
investment objectives. It may develop that the same investment decision is made
for more than one client or that a particular security is bought or sold for
only one client even though it might be held by, or bought or sold for, other
clients. Likewise, a particular security may be bought for one or more clients
when one or more clients are selling that same security. Some simultaneous
transactions are inevitable when several clients receive investment advice from
the same investment adviser, particularly when the same security is suitable for
the investment objectives of more than one client. When two or more Funds or
Portfolios or other clients are simultaneously engaged in the purchase or sale
of the same security, the securities are allocated among clients in a manner
believed to be equitable to each. It is recognized that in some cases this
system could have a detrimental effect on the price or volume of the security as
far as the Funds or Portfolios are concerned. However, it is believed that the
ability of the Funds and Portfolios to participate in volume transactions will
generally produce better executions for the Funds and Portfolios.
For the fiscal years ended October 31, 1991, 1992, 1993 the Capital Growth
Fund paid aggregate brokerage commissions of $6,495, $60,979 and $283,972,
respectively. For the fiscal year-ended October 31, 1994 and 1995, the Capital
Growth Portfolio paid aggregated brokerage commission of $1,242,652 and
$2,311,291 respectively. For the same periods, the Growth and Income Fund paid
aggregate brokerage commissions of $146,944 , $231,193 and $1,092,931,
respectively. For the fiscal year-ended October 31, 1994 and 1995, the Growth
and Income Portfolio paid aggregated brokerage commission of $1,515,504 and
$2,352,596, respectively.
For the period from November 30, 1990 through June 30, 1991, the fiscal
year ended June 30, 1992 and the fiscal period July 1, 1992 through October 31,
1992, the Vista Large Cap Equity Fund paid aggregate brokerage commissions of
$57,804, $49,230 and $37,288, respectively. For the fiscal year ended October
31, 1993, 1994 and 1995, the Large Cap Equity Fund paid aggregate brokerage
commissions of $129,600, $202,556 and $23,824, respectively.
21
<PAGE>
For the period from November 4, 1992 through October 31, 1993, and the
fiscal year ended October 31, 1994 and October 31, 1995, the Balanced Fund paid
aggregate brokerage commissions of $10,667, $26,724, and $27,315, respectively.
For the period from July 16, 1993 through October 31, 1993, and the fiscal
year-ended October 31, 1994 and October 31, 1995, the Equity Income Fund paid
aggregate brokerage commissions of $1,241, $23,520 and $23,824, respectively.
For the period December 20, 1994 through October 31, 1995, the Small Cap
Equity Fund paid aggregate brokerage commissions of $56,980.
No portfolio transactions are executed with the advisers or a Shareholder
Servicing Agent, or with any affiliate of the advisers or a Shareholder
Servicing Agent, acting either as principal or as broker.
PERFORMANCE INFORMATION
From time to time, a Fund may use hypothetical investment examples and
performance information in advertisements, shareholder reports or other
communications to shareholders. Because such performance information is based on
past investment results, it should not be considered as an indication or
representation of the performance of any classes of a Fund in the future. From
time to time, the performance and yield of classes of a Fund may be quoted and
compared to those of other mutual funds with similar investment objectives,
unmanaged investment accounts, including savings accounts, or other similar
products and to stock or other relevant indices or to rankings prepared by
independent services or other financial or industry publications that monitor
the performance of mutual funds. For example, the performance of a Fund or its
classes may be compared to data prepared by Lipper Analytical Services, Inc. or
Morningstar Mutual Funds on Disc, widely recognized independent services which
monitor the performance of mutual funds. Performance and yield data as reported
in national financial publications including, but not limited to, Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times, or
in local or regional publications, may also be used in comparing the performance
and yield of a Fund or its classes. A Fund's performance may be compared with
indices such as the Lehman Brothers Government/Corporate Bond Index, the Lehman
Brothers Government Bond Index, the Lehman Government Bond 1-3 Year Index and
the Lehman Aggregate Bond Index; the S&P 500 Index, the Dow Jones Industrial
Average or any other commonly quoted index of common stock prices; and the
Russell 2000 Index and the NASDAQ Composite Index. Additionally, a Fund may,
with proper authorization, reprint articles written about such Fund and provide
them to prospective shareholders.
A Fund may provide period and average annual "total rates of return." The
"total rate of return" refers to the change in the value of an investment in a
Fund over a period (which period shall be stated in any advertisement or
communication with a shareholder) based on any change in net asset value per
share including the value of any shares purchased through the reinvestment of
any dividends or capital gains distributions declared during such period. For
Class A shares, the average annual total rate of return figures will assume
payment of the maximum initial sales load at the time of purchase. For Class B
shares, the average annual total rate of return figures will assume deduction of
the applicable contingent deferred sales charge imposed on a total redemption of
shares held for the period. One-, five-, and ten-year periods will be shown,
unless the class has been in existence for a shorter-period.
Unlike some bank deposits or other investments which pay a fixed yield for
a stated period of time, the yields and the net asset values of the classes of
shares of a Fund will vary based on market conditions, the current market value
of the securities held by the Fund and changes in the Fund's expenses. The
advisers, Shareholder Servicing Agents, the Administrator, the Distributor and
other service providers may voluntarily waive a portion of their fees on a
month-to-month basis. In addition, the Distributor may assume a portion of a
Fund's operating expenses on a month-to-month basis. These actions would have
the effect of increasing the net income (and therefore the yield and total rate
of return) of the classes of shares of the Fund during the period such waivers
are in effect. These factors and possible differences in the methods used to
calculate the yields and total rates of return should be considered when
comparing the yields or total rates of return of the classes of shares of a Fund
to yields and total rates of return published for other investment companies and
other investment vehicles (including different classes of shares). The Trust is
advised that certain Shareholder Servicing Agents may credit to the accounts of
their customers from whom they are already receiving other fees amounts not
exceeding the Shareholder Servicing
22
<PAGE>
Agent fees received, which will have the effect of increasing the net return on
the investment of customers of those Shareholder Servicing Agents. Such
customers may be able to obtain through their Shareholder Servicing Agents
quotations reflecting such increased return.
In connection with the Hanover Reorganization, the Vista U.S. Government
Securities and Vista American Value Fund were established to receive the assets
of The Hanover U.S. Government Securities Fund and The Hanover American Value
Fund, respectively. Performance results presented for each class of the Vista
U.S. Government Securities Fund and Vista American Value Fund will be based upon
the performance of The Hanover U.S. Government Securities Fund and The Hanover
American Value Fund, respectively, for periods prior to the consummation of the
Hanover Reorganization.
Advertising or communications to shareholders may contain the views of the
advisers as to current market, economic, trade and interest rate trends, as well
as legislative, regulatory and monetary developments, and may include investment
strategies and related matters believed to be of relevance to a Fund.
Advertisements for the Vista funds may include references to the asset
size of other financial products made available by Chase, such as the offshore
assets of other funds.
Total Rate of Return
A Fund's or class' total rate of return for any period will be calculated
by (a) dividing (i) the sum of the net asset value per share on the last day of
the period and the net asset value per share on the last day of the period of
shares purchasable with dividends and capital gains declared during such period
with respect to a share held at the beginning of such period and with respect to
shares purchased with such dividends and capital gains distributions, by (ii)
the public offering price per share on the first day of such period, and (b)
subtracting 1 from the result. The average annual rate of return quotation will
be calculated by (x) adding 1 to the period total rate of return quotation as
calculated above, (y) raising such sum to a power which is equal to 365 divided
by the number of days in such period, and (z) subtracting 1 from the result.
The average annual total rate of return figures for the following Funds,
reflecting the initial investment and reinvested dividends for the one and five
year periods ended October 31, 1995, and for the period from commencement of
business operations of each such Fund to October 31, 1995, were as follows:
One Five Since Date of
Fund Year Years Inception Inception
- -------------------------------- ----------- ---------- ------------ ----------
American Value Fund
U.S. Treasury Income Fund
A Shares 14.59% 8.68% 9.64% 9/8/87
B Shares 13.80% -- 3.90% 11/4/93
Balanced Fund
A Shares 17.70% -- 12.09% 11/4/93
B Shares 16.93% -- 9.36% 11/4/93
Equity Income Fund 17.97% -- 9.54% 7/15/93
Growth and Income Fund
A Shares 17.79% 21.01% 22.99% 9/8/87
B Shares 17.21% -- 9.15% 11/5/93
Institutional Shares -- -- -- 11/4/95
Capital Growth Fund
A Shares 13.89% 25.37% 20.32% 9/8/87
B Shares 13.34% -- 8.72% 11/5/93
Institutional Shares -- -- -- 11/4/95
Bond Fund
Class A Shares -- -- -- 5/6/96
Class B Shares -- -- -- 5/6/96
Institutional Shares 15.83% -- 9.14% 11/30/90
Short-Term Bond Fund
Class A Shares -- -- -- 5/6/96
Institutional Shares 7.37% -- 5.81% 11/30/90
Large Cap Equity Fund
Class A Shares -- -- -- 5/6/96
Class B Shares -- -- -- 5/6/96
Institutional Shares 20.41% -- 14.12% 11/30/90
Small Cap Equity Fund
A Shares -- -- -- 12/20/94
B Shares -- -- -- 3/28/95
Institutional Shares -- -- -- 11/4/95
U.S. Government Securities Fund
Institutional Shares
23
<PAGE>
Had the maximum sales charge for the Class A shares (4.50% for the U.S.
Treasury Income Fund, Balanced Fund and Equity Income Fund and 4.75% for the
Small Cap Equity Fund, Growth and Income Fund and Capital Growth Fund) been in
effect, and the applicable CDSC for Class B shares for each period length,
the average annual total rate of return figures for the same periods would
have been as follows:
One Five Since
Fund Year Years Inception
- ------------------------------- ------------ --------- ------------
U.S. Treasury Income Fund
A Shares 9.43% 7.69% 9.02%
B Shares 8.80% -- --
Balanced Fund
A Shares 12.40% -- 10.38%
B Shares 11.95%
Equity Income Fund 12.66% -- 7.36%
Growth and Income Fund
A Shares 12.19% 19.84% 22.25%
B Shares 12.21% -- 7.29%
Institutional Shares
Capital Growth Fund
A Shares 8.48% 24.15% 19.60%
B Shares 8.34% -- 6.85%
Institutional Shares -- -- --
Small Cap Equity Fund
A Shares -- -- --
B Shares -- -- --
Institutional Shares -- -- --
24
<PAGE>
The Funds may also from time to time include in advertisements or other
communications a total return figure that is not calculated according to the
formula set forth above in order to compare more accurately the performance of a
Fund with other measures of investment return.
Yield Quotations
Any current "yield" quotation for a class of shares shall consist of an
annualized hypothetical yield, carried at least to the nearest hundredth of one
percent, based on a thirty calendar day period and shall be calculated by (a)
raising to the sixth power the sum of 1 plus the quotient obtained by dividing
the Fund's net investment income earned during the period by the product of the
average daily number of shares outstanding during the period that were entitled
to receive dividends and the maximum offering price per share on the last day of
the period, (b) subtracting 1 from the result, and (c) multiplying the result by
2.
25
<PAGE>
The yields of the Shares of the Funds for the thirty-day period ended
October 31, 1995 were as follows:
Class A Class B Institutional
------- ------- -------------
U.S. Treasury Income Fund 5.09% 4.58% N/A
Capital Growth Fund 0.49% 0.02% **
Balanced Fund 2.74% 2.12% N/A
Large Cap Equity Fund 1.87% * 1.87%
Equity Income Fund 2.04% * N/A
Bond Fund 6.15% * 6.15%
Growth and Income Fund 1.50% 1.08% **
Short-Term Bond Fund 5.69% N/A 5.69%
Small Cap Equity Fund 1.39% 0.73% **
U.S. Government Securities Fund
American Value Fund
- ---------
* Commencement of offering of class of shares on May 6, 1996.
** The Institutional Shares of the Growth and Income, Capital Growth and Small
Cap Equity Funds were first offered January 8, 1996.
Advertisements for the Funds may include references to the asset size of
other financial products made available by Chase, such as the offshore assets of
other funds advised by Chase.
Non-Standardized Performance Results
The table below reflects the net change in the value of an assumed initial
investment of $10,000 in the following Funds for the period from the
commencement date of business for each such Fund (which is either September 8,
September 23, 1987 or November 30, 1990 for the former Trinity Funds) and July
16, 1993 for the Equity Income Fund, and November 4, 1992 for the Balanced Fund.
The commencement of offering of all Funds' B shares was November 4, 1993, except
for the Small Cap Equity Fund, for which it was March 28, 1995. The values
reflect an assumption that capital gain distributions and income dividends, if
any, have been invested in additional Shares. From time to time, the Funds will
provide these performance results in addition to the total rate of return
quotations required by the Securities and Exchange Commission. As discussed more
fully in the Prospectus, neither these performance results, nor total rate of
return quotations, should be considered as representative of the performance of
the Funds in the future. These factors and the possible differences in the
methods used to calculate performance results and total rates of return should
be considered when comparing such performance results and total rate of return
quotations of the Funds with those published for other investment companies and
other investment vehicles.
26
<PAGE>
<TABLE>
<CAPTION>
Value of Value of
Initial Capital Value of
Period Ended $10,000 Gains Reinvested
October 31, 1995 Investment Distributions Dividends Total Value
- ---------------- ---------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
U.S. Treasury
Income Fund
A Shares $11,400.00 $1,065.04 $8,176.49 $21,181.53
B Shares 9,490.82 183.40 1,115.89 10,790.11
Balanced Fund
A Shares 12,450.00 239.70 1,334.82 14,074.53
B Shares 11,025.87 247.10 674.74 11,947.71
Equity Income Fund
A Shares 10,190.25 1,538.96 596.70 12,325.92
Growth and Income
Fund
A Shares 34,960.00 12,306.73 6,310.85 53,577.58
B Shares 11,454.43 132.30 315.91 11,902.64
Capital Growth Fund
A Shares 35,650.00 6,047.67 3,139.91 44,837.58
B Shares 11,277.88 481.89 48.83 11,808.60
Large Cap Equity Fund
Institutional Shares 12,240.00 5,436.94 1,480.01 19,156.95
Small Cap Equity Fund
A Shares 15,070.00 -- 55.16 15,125.16
B Shares 13,178.23 -- 31.09 13,209.32
Bond Fund
Institutional Shares 10,910.00 273.37 4,193.78 15,377.14
Short Term Bond Fund
Institutional Shares 10,080.00 16.32 3,107.56 3,203.88
U.S. Government Securities Fund
A Shares
Institutional Shares
American Value Fund
</TABLE>
Had the maximum sales charge (4.50% for the U.S. Treasury Income Fund,
balanced Fund and Equity Income Fund and 4.75% for the Growth and Income Fund,
Capital Growth Fund and Small Cap Equity Fund) been in effect for Class A
Shares, and the applicable CDSC for the period for the Class B Shares of each
Fund, the average annual total rate of return figures for the same periods
would have been as follows:
27
<PAGE>
<TABLE>
<CAPTION>
Value of Value of
Initial Capital Value of
Period Ended $10,000 Gains Reinvested
October 31, 1995 Investment Distributions Dividends Total Value
- ---------------- ---------- ------------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury
Income Fund
A Shares $10,887.00 $1,017.11 $8,324.25 $20,228.36
B Shares 9,111.19 183.40 1,115.89 10,410.48
Balanced Fund
A Shares 11,889.75 276.67 1,274.76 13,441.17
B Shares 10,625.87 247.10 674.74 11,547.71
Equity Income Fund
A Shares 9,731.70 1,469.70 569.85 11,771.25
Growth and Income Fund
A Shares 33,299.40 11,722.16 6,011.09 51,032.65
B Shares 11,054.43 132.30 315.91 11,502.64
Capital Growth Fund
A Shares $33,956.63 $5,760.40 $2,990.77 $42,707.80
B Shares 10,877.88 481.89 48.83 11,408.60
Small Cap Equity Fund
A Shares 14,354.18 -- 52.54 14,406.72
B Shares 12,709.32 -- 31.09 12,709.32
</TABLE>
DETERMINATION OF NET ASSET VALUE
As of the date of this Statement of Additional Information, the New York
Stock Exchange is open for trading every weekday except for the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Equity securities in a Fund's or Portfolio's portfolio are valued at the
last sale price on the exchange on which they are primarily traded or on the
NASDAQ National Market System, or at the last quoted bid price for securities in
which there were no sales during the day or for other unlisted
(over-the-counter) securities not reported on the NASDAQ National Market System.
Bonds and other fixed income securities (other than short-term obligations, but
including listed issues) in a Fund's or Portfolio's portfolio are valued on the
basis of valuations furnished by a pricing service, the use of which has been
approved by the Board of Trustees. In making such valuations, the pricing
service utilizes both dealer-supplied valuations and electronic data processing
techniques that take into account appropriate factors such as institutional-size
trading in similar groups of securities, yield, quality, coupon rate, maturity,
type of issue, trading characteristics and other market data, without exclusive
reliance upon quoted prices or exchange or over-the-counter prices, since such
valuations are believed to reflect more accurately the fair value of such
securities. Short-term obligations which mature in 60 days or less are valued at
amortized cost, which constitutes fair value as determined by the Board of
Trustees. Futures and option contracts that are traded on commodities or
securities exchanges are normally valued at the settlement price on the exchange
on which they are traded. Portfolio securities (other than short-term
obligations) for which there are no such quotations or valuations are valued at
fair value as determined in good faith by or at the direction of the Board of
Trustees.
28
<PAGE>
Interest income on long-term obligations in a Fund's or Portfolio's
portfolio is determined on the basis of coupon interest accrued plus
amortization of discount (the difference between acquisition price and stated
redemption price at maturity) and premiums (the excess of purchase price over
stated redemption price at maturity). Interest income on short-term obligations
is determined on the basis of interest and discount accrued less amortization of
premium.
PURCHASES, REDEMPTIONS AND EXCHANGES
The Fund has established certain procedures and restrictions, subject to
change from time to time, for purchase, redemption, and exchange orders,
including procedures for accepting telephone instructions and effecting
automatic investments and redemptions. The Funds' Transfer Agent may defer
acting on a shareholder's instructions until it has received them in proper
form. In addition, the privileges described in the Prospectuses are not
available until a completed and signed account application has been received by
the Transfer Agent. Telephone transaction privileges are made available to
shareholders automatically upon opening an account unless the privilege is
declined in Section 6 of the Account Application.
Upon receipt of any instructions or inquiries by telephone from a
shareholder or, if held in a joint account, from either party, or from any
person claiming to be the shareholder, a Fund or its agent is authorized,
without notifying the shareholder or joint account parties, to carry out the
instructions or to respond to the inquiries, consistent with the service options
chosen by the shareholder or joint shareholders in his or their latest account
application or other written request for services, including purchasing,
exchanging, or redeeming shares of such Fund and depositing and withdrawing
monies from the bank account specified in the Bank Account Registration section
of the shareholder's latest account application or as otherwise properly
specified to such Fund in writing.
Subject to compliance with applicable regulations, each Fund has reserved
the right to pay the redemption price of its Shares, either totally or
partially, by a distribution in kind of portfolio securities (instead of cash).
The securities so distributed would be valued at the same amount as that
assigned to them in calculating the net asset value for the shares being sold.
If a shareholder received a distribution in kind, the shareholder could incur
brokerage or other charges in converting the securities to cash. The Trust has
filed an election under Rule 18f-1 committing to pay in cash all redemptions by
a shareholder of record up to amounts specified by the rule (approximately
$250,000).
With respect to the Growth and Income Fund and Capital Growth Fund, the
Trust will redeem Fund shares in kind only if it has received a redemption in
kind from the corresponding Portfolio and therefore shareholders of the Fund
that receive redemptions in kind will receive portfolio securities of such
Portfolio and in no case will they receive a security issued by the Portfolio.
Each Portfolio has advised the Trust that the Portfolio will not redeem in kind
except in circumstances in which the corresponding Fund is permitted to redeem
in kind or unless requested by the corresponding Fund.
To retain investment flexibility, the Small Cap Equity Fund may decide to
discontinue selling shares of the Fund to new shareholders when the net assets
reach approximately $500 million.
Each investor in a Portfolio, including the corresponding Fund, may add to
or reduce its investment in the Portfolio on each day that the New York Stock
Exchange is open for business. Once each such day, based upon prices determined
as of the close of regular trading on the New York Stock Exchange (normally 4:00
p.m., Eastern time, however, options are priced at 4:15 p.m., Eastern time)
the value of each investor's interest in a Portfolio will be determined by
multiplying the net asset value of the Portfolio by the percentage representing
that investor's share of the aggregate beneficial interests in the Portfolio.
Any additions or reductions which are to be effected on that day will then be
effected. The investor's percentage of the aggregate beneficial interests in a
Portfolio will then be recomputed as the percentage equal to the fraction (i)
the numerator of which is the value of such investor's investment in the
Portfolio
29
<PAGE>
as of such time on such day plus or minus, as the case may be, the amount of net
additions to or reductions in the investor's investment in the Portfolio
effected on such day and (ii) the denominator of which is the aggregate net
asset value of the Portfolio as of such time on such day plus or minus, as the
case may be, the amount of net additions to or reductions in the aggregate
investments in the Portfolio by all investors in the Portfolio. The percentage
so determined will then be applied to determine the value of the investor's
interest in the Portfolio as of such time on the following day the New York
Stock Exchange is open for trading.
Investors in Class A shares may qualify for reduced initial sales charges
by signing a statement of intention (the "Statement"). This enables the investor
to aggregate purchases of Class A shares in the Fund with purchases of Class A
shares of any other Fund in the Trust (or if a Fund has only one class, shares
of such Fund), excluding shares of any Vista money market fund, during a
13-month period. The sales charge is based on the total amount to be invested in
Class A shares during the 13-month period. All Class A or other qualifying
shares of these Funds currently owned by the investor will be credited as
purchases (at their current offering prices on the date the Statement is signed)
toward completion of the Statement. A 90-day back-dating period can be used to
include earlier purchases at the investor's cost. The 13-month period would then
begin on the date of the first purchase during the 90-day period. No retroactive
adjustment will be made if purchases exceed the amount indicated in the
Statement. A shareholder must notify the Transfer Agent or Distributor whenever
a purchase is being made pursuant to a Statement.
Under the Exchange Privilege, shares may be exchanged for shares of
another fund only if shares of the fund exchanged into are registered in the
state where the exchange is to be made. Shares of a Fund may only be exchanged
into another fund if the account registrations are identical. With respect to
exchanges from any Vista money market fund, shareholders must have acquired
their shares in such money market fund by exchange from one of the Vista
non-money market funds or the exchange will be done at relative net asset value
plus the appropriate sales charge. Any such exchange may create a gain or loss
to be recognized for federal income tax purposes. Normally, shares of the fund
to be acquired are purchased on the redemption rate, but such purchase may be
delayed by either fund for up to five business days if a fund determines that it
would be disadvantaged by an immediate transfer of the proceeds.
The contingent deferred sales charge for Class B shares will be waived for
certain exchanges and for redemptions in connection with a Fund's systematic
withdrawal plan, subject to the conditions described in the Prospectuses. In
addition, subject to confirmation of a shareholder's status, the contingent
deferred sales charge will be waived for: (i) a total or partial redemption made
within one year of the shareholder's death or initial qualification for Social
Security disability payments; (ii) a redemption in connection with a Minimum
Required Distribution from an IRA, Keogh or custodial account under section
403(b) of the Internal Revenue Code; (iii) redemptions made from an IRA, Keogh
or custodial account under section 403(b) of the Internal Revenue Code through
an established Systematic Redemption Plan; (iv) distributions from a qualified
plan upon retirement; (v) a redemption resulting from an over-contribution to an
IRA; and (vi) an involuntary redemption of an account balance under $500.
Class B shares automatically convert to Class A shares (and thus are then
subject to the lower expenses borne by Class A shares) after a period of time
specified below has elapsed since the date of purchase (the "CDSC Period"),
together with the pro rata portion of all Class B shares representing dividends
and other distributions paid in additional Class B shares attributable to the
Class B shares then converting. The conversion of Class B shares purchased on or
after May 1, 1996, will be effected at the relative net asset values per share
of the two classes on the first business day of the month following the eighth
anniversary of the original purchase. The conversion of Class B shares purchased
prior to May 1, 1996, will be effected at the relative net asset values per
share of the two classes on the first business day of the month following the
seventh anniversary of the original purchase. If any exchanges of Class B shares
during the CDSC Period occurred, the holding period for the shares exchanged
will be counted toward the CDSC Period. At the time of the conversion the net
asset value per share of the Class A shares may be higher or lower than the net
asset value per share of the Class B shares; as a result, depending on the
relative net asset values per share, a shareholder may receive fewer or more
Class A shares than the number of Class B shares converted.
A Fund may require signature guarantees for changes that shareholders
request be made in Fund records with respect to their accounts, including but
not limited to, changes in bank accounts, for any written requests for
additional account services made after a shareholder has submitted an initial
account application to the Fund, and in certain other circumstances described
in the Prospectuses. A Fund may also refuse to accept or carry out any
transaction that does not satisfy any restrictions then in effect. A signature
guarantee may be obtained from a bank, trust company, broker-dealer or other
member of a national securities exchange. Please note that a notary public
cannot provide a signature guarantee.
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TAX MATTERS
The following is only a summary of certain additional tax considerations
generally affecting the Funds and their shareholders that are not described in
the respective Fund's Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
discussions here and in each Fund's Prospectus are not intended as substitutes
for careful tax planning.
Qualification as a Regulated Investment Company
Each Fund has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a
regulated investment company, each Fund is not subject to federal income tax on
the portion of its net investment income (i.e., taxable interest, dividends and
other taxable ordinary income, net of expenses) and capital gain net income
(i.e., the excess of capital gains over capital losses) that it distributes to
shareholders, provided that it distributes at least 90% of its investment
company taxable income (i.e., net investment income and the excess of net
short-term capital gain over net long-term capital loss) for the taxable year
(the "Distribution Requirement"), and satisfies certain other requirements of
the Code that are described below. Distributions by a Fund made during the
taxable year or, under specified circumstances, within twelve months after the
close of the taxable year, will be considered distributions of income and gains
of the taxable year and can therefore satisfy the Distribution Requirement.
Because certain Funds invest all of their assets in Portfolios which will be
classified as partnerships for federal income tax purposes, such Funds will be
deemed to own a proportionate share of the income of the Portfolio into which
each contributes all of its assets for purposes of determining whether such
Funds satisfy the Distribution Requirement and the other requirements necessary
to qualify as a regulated investment company (e.g., Income Requirement
(hereinafter defined), etc.).
In addition to satisfying the Distribution Requirement, a regulated
investment company must: (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement"); and (2) derive less
than 30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or foreign
currencies (or options, futures or forward contracts thereon) held for less than
three months (the "Short-Short Gain Test"). However, foreign currency gains,
including those derived from options, futures and forwards, will not in any
event be characterized as Short-Short Gain if they are directly related to the
regulated investment company's investments in stock or securities (or options or
futures thereon). Because of the Short-Short Gain Test, a Fund may have to limit
the sale of appreciated securities that it has held for less than three months.
However, the Short-Short Gain Test will not prevent a Fund from disposing of
investments at a loss, since the recognition of a loss before the expiration of
the three-month holding period is disregarded for this purpose. Interest
(including original issue discount) received by a Fund at maturity or upon the
disposition of a security held for less than three months will not be treated as
gross income derived from the sale or other disposition of such security within
the meaning of the Short-Short Gain Test. However, income that is attributable
to realized market appreciation will be treated as gross income from the sale or
other disposition of securities for this purpose.
In general, gain or loss recognized by a Fund on the disposition of an
asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by a Fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Fund held the debt obligation.
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<PAGE>
Further, the Code also treats as ordinary income, a portion of the capital
gain attributable to a transaction where substantially all of the return
realized is attributable to the time value of a Fund's net investment in the
transaction and: (1) the transaction consists of the acquisition of property by
such Fund and a contemporaneous contract to sell substantially identical
property in the future; (2) the transaction is a straddle within the meaning of
Section 1092 of the Code; (3) the transaction is one that was marketed or sold
to such Fund on the basis that it would have the economic characteristics of a
loan but the interest-like return would be taxed as capital gain; or (4) the
transaction is described as a conversion transaction in the Treasury
Regulations. The amount of the gain recharacterized generally will not exceed
the amount of the interest that would have accrued on the net investment for the
relevant period at a yield equal to 120% of the federal long-term, mid-term, or
short-term rate, depending upon the type of instrument at issue, reduced by an
amount equal to: (1) prior inclusions of ordinary income items from the
conversion transaction; and (2) the capitalized interest on acquisition
indebtedness under Code Section 263(g). Built-in losses will be preserved where
a Fund has a built-in loss with respect to property that becomes a part of a
conversion transaction. No authority exists that indicates that the converted
character of the income will not be passed to a Fund's shareholders.
In general, for purposes of determining whether capital gain or loss
recognized by a Fund on the disposition of an asset is long-term or short-term,
the holding period of the asset may be affected if: (1) the asset is used to
close a "short sale" (which includes for certain purposes the acquisition of a
put option) or is substantially identical to another asset so used, (2) the
asset is otherwise held by the Fund as part of a "straddle" (which term
generally excludes a situation where the asset is stock and the Fund grants a
qualified covered call option (which, among other things, must not be
deep-in-the-money) with respect thereto); or (3) the asset is stock and the Fund
grants an in-the- money qualified covered call option with respect thereto.
However, for purposes of the Short-Short Gain Test, the holding period of the
asset disposed of may be reduced only in the case of clause (1) above. In
addition, a Fund may be required to defer the recognition of a loss on the
disposition of an asset held as part of a straddle to the extent of any
unrecognized gain on the offsetting position.
Any gain recognized by a Fund on the lapse of, or any gain or loss
recognized by a Fund from a closing transaction with respect to, an option
written by the Fund will be treated as a short-term capital gain or loss. For
purposes of the Short-Short Gain Test, the holding period of an option written
by a Fund will commence on the date it is written and end on the date it lapses
or the date a closing transaction is entered into. Accordingly, a Fund may be
limited in its ability to write options which expire within three months and to
enter into closing transactions at a gain within three months of the writing of
options.
Transactions that may be engaged in by certain of the Funds (such as
regulated futures contracts, certain foreign currency contracts, and options on
stock indexes and futures contracts) will be subject to special tax treatment as
"Section 1256 contracts." Section 1256 contracts are treated as if they are sold
for their fair market value on the last business day of the taxable year, even
though a taxpayer's obligations (or rights) under such contracts have not
terminated (by delivery, exercise, entering into a closing transaction or
otherwise) as of such date. Any gain or loss recognized as a consequence of the
year-end deemed disposition of Section 1256 contracts is taken into account for
the taxable year together with any other gain or loss that was previously
recognized upon the termination of Section 1256 contracts during that taxable
year. Any capital gain or loss for the taxable year with respect to Section 1256
contracts (including any capital gain or loss arising as a consequence of the
year-end deemed sale of such contracts) is generally treated as 60% long-term
capital gain or loss and 40% short-term capital gain or loss. A Fund, however,
may elect not to have this special tax treatment apply to Section 1256 contracts
that are part of a "mixed straddle" with other investments of the Fund that are
not Section 1256 contracts. The Internal Revenue Service (the "IRS") has held in
several private rulings that gains arising from Section 1256 contracts will be
treated for purposes of the Short-Short Gain Test as being derived from
securities held for not less than three months if the gains arise as a result of
a constructive sale under Code Section 1256.
Treasury Regulations permit a regulated investment company, in determining
its investment company taxable income and net capital gain (i.e., the excess of
net long-term capital gain over net short-term capital loss) for any
32
<PAGE>
taxable year, to elect (unless it has made a taxable year election for excise
tax purposes as discussed below) to treat all or any part of any net capital
loss, any net long-term capital loss or any net foreign currency loss incurred
after October 31 as if it had been incurred in the succeeding year.
In addition to satisfying the requirements described above, each Fund must
satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of a Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in securities
of such issuer and as to which the Fund does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses. Generally, an option (call
or put) with respect to a security is treated as issued by the issuer of the
security not the issuer of the option. However, with regard to forward currency
contracts, there does not appear to be any formal or informal authority which
identifies the issuer of such instrument. For purposes of asset diversification
testing, obligations issued or guaranteed by agencies or instrumentality's of
the U.S. Government such as the Federal Agricultural Mortgage Corporation, the
Farm Credit System Financial Assistance Corporation, a Federal Home Loan Bank,
the Federal Home Loan Mortgage Association, the Government National Mortgage
Corporation, and the Student Loan Marketing Association are treated as U.S.
Government Securities.
If for any taxable year a Fund does not qualify as a regulated investment
company, all of its taxable income (including its net capital gain) will be
subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (a "taxable year election"). The balance
of such income must be distributed during the next calendar year. For the
foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall: (1)
reduce its capital gain net income (but not below its net capital gain) by the
amount of any net ordinary loss for the calendar year; and (2) exclude foreign
currency gains and losses incurred after October 31 of any year (or after the
end of its taxable year if it has made a taxable year election) in determining
the amount of ordinary taxable income for the current calendar year (and,
instead, include such gains and losses in determining ordinary taxable income
for the succeeding calendar year).
Each Fund intends to make sufficient distributions or deemed distributions
of its ordinary taxable income and capital gain net income prior to the end of
each calendar year to avoid liability for the excise tax. However, investors
should note that a Fund may in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.
Fund Distributions
33
<PAGE>
Each Fund anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be taxable
to shareholders as ordinary income and treated as dividends for federal income
tax purposes, but they will qualify for the 70% dividends-received deduction for
corporations only to the extent discussed below. Dividends paid on Class A and
Class B shares are calculated at the same time. In general, dividends on Class B
shares are expected to be lower than those on Class A shares due to the higher
distribution expenses borne by the Class B shares. Dividends may also differ
between classes as a result of differences in other class specific expenses.
A Fund may either retain or distribute to shareholders its net realized
capital gain for each taxable year. Each Fund currently intends to distribute
any such amounts. If net capital gain is distributed and designated as a capital
gain dividend, it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares [or whether
such gain was recognized by the Fund prior to the date on which the shareholder
acquired his shares.]
Conversely, if a Fund elects to retain its net realized capital gain, the
Fund will be taxed thereon (except to the extent of any available capital loss
carryovers) at the 35% corporate tax rate. If a Fund elects to retain its net
capital gain, it is expected that the Fund also will elect to have shareholders
of record on the last day of its taxable year treated as if each received a
distribution of his pro rata share of such gain, with the result that each
shareholder will be required to report his pro rata share of such gain on his
tax return as long-term capital gain, will receive a refundable tax credit for
his pro rata share of tax paid by the Fund on the gain, and will increase the
tax basis for his shares by an amount equal to the deemed distribution less the
tax credit.
Ordinary income dividends paid by a Fund with respect to a taxable year
will qualify for the 70% dividends- received deduction generally available to
corporations to the extent of the amount of qualifying dividends received by a
Fund from domestic corporations for the taxable year. A dividend received by a
Fund will not be treated as a qualifying dividend (1) if it has been received
with respect to any share of stock that the Fund has held for less than 46 days
(91 days in the case of certain preferred stock), excluding for this purpose
under the rules of Code Section 246(c) (3) and (4): (i) any day more than 45
days (or 90 days in the case of certain preferred stock) after the date on which
the stock becomes ex-dividend and (ii) any period during which a Fund has an
option to sell, is under a contractual obligation to sell, has made and not
closed a short sale of, is the grantor of a deep-in-the-money or otherwise
nonqualified option to buy, or has otherwise diminished its risk of loss by
holding other positions with respect to, such (or substantially identical)
stock; (2) to the extent that a Fund is under an obligation (pursuant to a short
sale or otherwise) to make related payments with respect to positions in
substantially similar or related property; or (3) to the extent the stock on
which the dividend is paid is treated as debt-financed under the rules of Code
Section 246A. Moreover, the dividends-received deduction for a corporate
shareholder may be disallowed or reduced (1) if the corporate shareholder fails
to satisfy the foregoing requirements with respect to its shares of a Fund or
(2) by application of Code Section 246(b) which in general limits the
dividends-received deduction to 70% of the shareholder's taxable income
(determined without regard to the dividends-received deduction and certain other
items). In the case where a Fund invests all of its assets in a Portfolio and
the Fund satisfies the holding period rules pursuant to Code Section 246(c) as
to its interest in the Portfolio, a corporate shareholder which satisfies the
foregoing requirements with respect to its shares of the Fund should receive the
dividends-received deduction.
For purposes of the Corporate AMT and the environmental Superfund tax, the
corporate dividends-received deduction is not itself an item of tax preference
that must be added back to taxable income or is otherwise disallowed in
determining a corporation's AMT. However, corporate shareholders will generally
be required to take the full amount of any dividend received from a Fund into
account (without a dividends-received deduction) in determining its adjusted
current earnings.
Investment income that may be received by certain of the Funds from
sources within foreign countries may be subject to foreign taxes withheld at the
source. The United States has entered into tax treaties with many foreign
countries which entitle any such Fund to a reduced rate of, or exemption from,
taxes on such income. It is
34
<PAGE>
impossible to determine the effective rate of foreign tax in advance since the
amount of any such Fund's assets to be invested in various countries is not
known.
Distributions by a Fund that do not constitute ordinary income dividends,
or capital gain dividends will be treated as a return of capital to the extent
of (and in reduction of) the shareholder's tax basis in his shares; any excess
will be treated as gain from the sale of his shares, as discussed below.
Distributions by a Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of a Fund reflects undistributed net
investment income or recognized capital gain net income, or unrealized
appreciation in the value of the assets of the Fund, distributions of such
amounts will be taxable to the shareholder in the manner described above,
although such distributions economically constitute a return of capital to the
shareholder.
Ordinarily, shareholders are required to take distributions by a Fund into
account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
A Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of ordinary income dividends and capital gain dividends, and the
proceeds of redemption of shares, paid to any shareholder (1) who has provided
either an incorrect tax identification number or no number at all, (2) who is
subject to backup withholding by the IRS for failure to report the receipt of
interest or dividend income properly, or (3) who has failed to certify to the
Fund that it is not subject to backup withholding or that it is a corporation or
other "exempt recipient."
Sale or Redemption of Shares
A shareholder will recognize gain or loss on the sale or redemption of
shares of a Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of the Fund within 30 days before or after the sale or
redemption. In general, any gain or loss arising from (or treated as arising
from) the sale or redemption of shares of a Fund will be considered capital gain
or loss and will be long- term capital gain or loss if the shares were held for
longer than one year. However, any capital loss arising from the sale or
redemption of shares held for six months or less will be disallowed to the
extent of the amount of exempt- interest dividends received on such shares and
(to the extent not disallowed) will be treated as a long-term capital loss to
the extent of the amount of capital gain dividends received on such shares. For
this purpose, the special holding period rules of Code Section 246(c)(3) and (4)
(discussed above in connection with the dividends-received deduction for
corporations) generally will apply in determining the holding period of shares.
Long-term capital gains of noncorporate taxpayers are currently taxed at a
maximum rate 11.6% lower than the maximum rate applicable to ordinary income.
Capital losses in any year are deductible only to the extent of capital gains
plus, in the case of a noncorporate taxpayer, $3,000 of ordinary income.
If a shareholder (1) incurs a sales load in acquiring shares of a Fund,
(2) disposes of such shares less than 91 days after they are acquired and (3)
subsequently acquires shares of the Fund or another fund at a reduced sales load
pursuant to a right to reinvest at such reduced sales load acquired in
connection with the acquisition of the shares disposed of, then the sales load
on
35
<PAGE>
the shares disposed of (to the extent of the reduction in the sales load on
the shares subsequently acquired) shall not be taken into account in determining
gain or loss on the shares disposed of but shall be treated as incurred on the
acquisition of the shares subsequently acquired.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, foreign trust or estate, foreign corporation, or foreign
partnership ("foreign shareholder"), depends on whether the income from a Fund
is "effectively connected" with a U.S. trade or business carried on by such
shareholder.
If the income from a Fund is not effectively connected with a U.S. trade
or business carried on by a foreign shareholder, ordinary income dividends paid
to a foreign shareholder will be subject to U.S. withholding tax at the rate of
30% (or lower treaty rate) upon the gross amount of the dividend. Such a foreign
shareholder would generally be exempt from U.S. federal income tax on gains
realized on the sale of shares of the Fund, capital gain dividends and
exempt-interest dividends and amounts retained by the Fund that are designated
as undistributed capital gains.
If the income from a Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations.
In the case of foreign noncorporate shareholders, a Fund may be required
to withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding tax (or taxable at a reduced treaty rate)
unless such shareholders furnish the Fund with proper notification of its
foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in a Fund,
including the applicability of foreign taxes.
Effect of Future Legislation; Local Tax Considerations
The foregoing general discussion of U.S. federal income tax consequences
is based on the Code and the Treasury Regulations issued thereunder as in effect
on the date of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and capital
gain dividends from regulated investment companies often differ from the rules
for U.S. federal income taxation described above. Shareholders are urged to
consult their tax advisers as to the consequences of these and other state and
local tax rules affecting investment in a Fund.
MANAGEMENT OF THE TRUST AND THE FUNDS OR PORTFOLIOS
Trustees and Officers
The Trustees and officers and their principal occupations for at least the
past five years are set forth below. Their titles may have varied during that
period. Unless otherwise indicated below, the address of each officer is 125 W.
55th Street, New York, New York 10019.
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<PAGE>
Fergus Reid, III - Chairman of the Trust. Chairman and Chief Executive
Officer, Lumelite Corporation, since September 1985; Trustee, Morgan Stanley
Funds. Age: 63. Address: 202 June Road, Stamford, CT 06903.
Richard E. Ten Haken - Trustee. Former District Superintendent of Schools,
Monroe No. 2 and Orleans Counties, New York; Chairman of the Finance and the
Audit and Accounting Committees, Member of the Executive Committee; Chairman of
the Board and President, New York State Teachers' Retirement System. Age: 61.
Address: 4 Barnfield Road, Pittsford, NY 14534.
William J. Armstrong - Trustee. Vice President and Treasurer,
Ingersoll-Rand Company. Age: 54. Address: 49 Aspen Way, Upper Saddle River, NJ
07458.
John R.H. Blum - Trustee. Attorney in private practice; formerly, partner
in the law firm of Richards, O'Neil & Allegaert; Commissioner of Agriculture -
State of Connecticut, 1992-1995. Age: 66. Address: 322 Main Street, Lakeville,
CT 06039.
Joseph J. Harkins - Trustee. Retired; Commercial Sector Executive and
Executive Vice President of The Chase Manhattan Bank, N.A. from 1985 through
1989. He has been employed by Chase in numerous capacities and offices since
1954. Director of Blessings Corporation, Jefferson Insurance Company of New
York, Monticello Insurance Company and Nationar. Age: 64. Address: 257
Plantation Circle South, Ponte Vedra Beach, FL 32082.
*H. Richard Vartabedian - Trustee and President of the Trust; Chairman of
the Portfolios. Consultant, Republic Bank of New York; formerly, Senior
Investment Officer, Division Executive of the Investment Management Division of
The Chase Manhattan Bank, N.A., 1980 through 1991. Age: 60. Address: P.O. Box
296, Beach Road, Hendrick's Head, Southport, ME 04576.
Stuart W. Cragin, Jr. - Trustee. Retired; formerly President, Fairfield
Testing Laboratory, Inc. He has previously served in a variety of marketing,
manufacturing and general management positions with Union Camp Corp., Trinity
Paper & Plastics Corp., and Conover Industries. Age: 63. Address: 108 Valley
Road, Cos Cob, CT 06807.
Irving L. Thode - Trustee. Retired; formerly Vice President of Quotron
Systems. He has previously served in a number of executive positions with
Control Data Corp., including President of its Latin American Operations, and
General Manager of its Data Services business. Age: 64. Address: 80 Perkins
Road, Greenwich, CT 06830.
*W. Perry Neff - Trustee. Independent Financial Consultant; Director of
North America Life Assurance Co., Petroleum & Resources Corp. and The Adams
Express Co.; Director and Chairman of The Hanover Funds, Inc.; Director,
Chairman and President of The Hanover Investment Funds, Inc. Age: 68. Address:
RR 1 Box 102, Weston, VT 05181.
Roland R. Eppley, Jr. - Trustee. Retired: formerly President and Chief
Executive Officer, Eastern States Bankcard Association Inc, (1971-1988);
Director, Janel Hydraulics, Inc.; Director of The Hanover Funds, Inc. Age: 63.
Address: 105 Ceventry Place, Palm Beach Gardens, FL 33418.
W.D. MacCallan - Trustee. Director of The Adams Express Co. and Petroleum
& Resources Corp.; formerly Chairman of the Board and Chief Executive Officer of
The Adams Express Co. and Petroleum & Resources Corp.; Director of The Hanover
Funds, Inc. and The Hanover Investment Funds, Inc. Age: 68. Address: 624 East
45th Street, Savannah, GA 31405
Martin R. Dean - Treasurer and Assistant Secretary. Associate Director,
Accounting Services, BISYS Fund Services; formerly Senior Manager, KPMG Peat
Marwick (1987-1994). Age: 32. Address: 3435 Stelzer Road, Columbus, OH 43219.
Ann E. Bergin - Secretary. First Vice President, BISYS Fund Services,
Inc.; formerly, Senior Vice President, Administration, Concord Financial Group
(1991-1995); Assistant Vice President, Dreyfus Service Corporation (1982-1991).
Age: 35. Address: 125 West 55th Street, New York, NY 10019.
- ------------
* Asterisks indicate those Trustees that are "interested persons" (as defined
in the 1940 Act). Mr. Reid is not an interested person of the Trust's
investment advisers or principal underwriter, but may be deemed an
interested person of the Trust solely by reason of being an officer of the
Trust.
The Board of Trustees of the Trust presently has an Audit Committee. The
members of the Audit Committee are Messrs. Ten Haken (Chairman), Blum, Cragin,
Thode, Armstrong, Harkins, Reid, and Vartabedian. The function of the Audit
Committee is to recommend independent auditors and monitor accounting and
financial matters. The Audit Committee met two times during the fiscal year
ended October 31, 1995.
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The Board of Trustees of the Trust has established an Investment
Committee. The members of the Investment Committee are Messrs. Vartabedian
(Chairman) and Reid, as well as Leonard M. Spalding, President of Vista Capital
Management. The function of the Investment Committee is to review the investment
management process of the Trust.
Remuneration of Trustees and Certain Executive Officers:
Each Trustee is reimbursed for expenses incurred in attending each meeting
of the Board of Trustees or any committee thereof. Each Trustee who is not an
affiliate of the adviser is compensated for his or her services according to a
fee schedule which recognizes the fact that each Trustee also serves as a
Trustee of other investment companies advised by the adviser. Each Trustee
receives a fee, allocated among all investment companies for which the Trustee
serves, which consists of an annual retainer component and a meeting fee
component. Effective August 21, 1995, each Trustee of the Vista Funds receives a
quarterly retainer of $12,000 and an additional per meeting fee of $1,500. Prior
to August 21, 1995, the quarterly retainer was $9,000 and the per-meeting fee
was $1,000. The Chairman of the Trustees and the Chairman of the Investment
Committee each receive a 50% increment over regular Trustee total compensation
for serving in such capacities for all the investment companies advised by the
adviser.
Set forth below is information regarding compensation paid or accrued
during the fiscal year ended October 31, 1995 for each Trustee of the Trust:
38
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<TABLE>
<CAPTION>
Growth
Equity and Capital
Balanced Income Income Growth Equity Bond
Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Fergus Reid, III, $241.30 $96.13 $14,393.16 $7,594.67 $540.99 $468.64
Trustee
Richard E. Ten 160.88 64.07 9,595.45 5,063.12 360.67 312.41
Haken, Trustee
William J. 160.88 64.07 9,595.45 5,063.12 360.67 312.41
Armstrong, Trustee
John R.H. Blum, 190.83 62.60 9,376.63 4,955.42 352.06 305.11
Trustee
Joseph J. Harkins, 160.88 64.07 9,595.45 5,063.12 360.67 312.41
Trustee
H. Richard 169.60 67.79 10,159.13 5,376.61 330.18 330.18
Vartabedian, Trustee
Stuart W. Cragin, 160.88 64.07 9,595.45 5,063.12 360.67 312.41
Jr., Trustee
Irving L. Thode, 160.88 64.07 9,595.45 5,063.12 360.67 312.41
Trustee
W. Perry Neff, Trustee 0 0 0 0 0 0
Ronald R. Eppley, Jr., 0 0 0 0 0 0
Trustee
W.D. MacCallan, Trustee 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
Short Small Inter- Global
Term U.S. Cap national Fixed Southeast
Bond Government Equity Equity Income Asian Japan European
Fund Fund Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fergus Reid, III, $298.13 $919.27 $172.16 $315.97 $8.47 0 0 0
Trustee
Richard E. Ten 195.40 612.85 114.79 210.64 5.64 0 0 0
Haken, Trustee
William J. 195.40 612.85 114.79 210.64 5.64 0 0 0
Armstrong, Trustee
John R.H. Blum, 190.83 598.68 114.79 205.42 5.64 0 0 0
Trustee
Joseph J. Harkins, 195.40 612.85 114.79 210.64 5.64 0 0 0
Trustee
H. Richard 206.44 646.75 133.68 219.47 5.64 0 0 0
Vartabedian, Trustee
Stuart W. Cragin, 195.40 612.85 114.79 210.64 5.64 0 0 0
Jr., Trustee
Irving L. Thode, 195.40 612.85 114.79 210.64 5.64 0 0 0
Trustee
W. Perry Neff, 0 0 0 0 0 0 0 0
Trustee
Ronald R. Eppley, Jr., 0 0 0 0 0 0 0 0
Trustee
W.D. MacCallan, 0 0 0 0 0 0 0 0
Trustee
</TABLE>
<PAGE>
Pension or Total
Retirement Compensation
Benefits Accrued from
as Fund Expenses "Fund
---------------- Complex"(1)
-----------
Fergus Reid, 0 $78,456.65
III, Trustee
Richard E. Ten 0 52,304.39
Haken, Trustee
William J. 0 52,304.39
Armstrong,
Trustee
John R.H. Blum, 0 51,304.37
Trustee
Joseph J. 0 52,304.39
Harkins, Trustee
H. Richard 0 74,804.44
Vartabedian,
Trustee
Stuart W. 0 52,304.39
Cragin, Jr.,
Trustee
Irving L. Thode, 0 52,304.39
Trustee
W. Perry Neff, 0 0
Trustee
Ronald R. Eppley, Jr., 0 0
Trustee
W.D. MacCallan, 0 0
Trustee
39
<PAGE>
(1) Data reflects total compensation earned during the period January 1, 1995
to December 31, 1995 for service as a Trustee to all Funds advised by the
adviser.
Vista Funds Retirement Plan for Eligible Trustees
Effective August 21, 1995, the Trustees also instituted a Retirement Plan
for Eligible Trustees (the "Plan") pursuant to which each Trustee (who is not an
employee of any of the Funds, the adviser or sub-adviser, Administrator or
distributor or any of their affiliates) may be entitled to certain benefits upon
retirement from the Board of Trustees. Pursuant to the Plan, the normal
retirement date is the date on which the eligible Trustee has attained age 65
and has completed at least five years of continuous service with one or more of
the investment companies advised by the adviser (collectively, the "Covered
Funds"). Each Eligible Trustee is entitled to receive from the Covered Funds an
annual benefit commencing on the first day of the calendar quarter coincident
with or following his date of retirement equal to 10% of the highest annual
compensation received from the Covered Funds multiplied by the number of such
Trustee's years of service (not in excess of 10 years) completed with respect to
any of the Covered Funds. Such benefit is payable to each eligible Trustee in
monthly installments for the life of the Trustee.
Set forth below in the table below are the estimated annual benefits
payable to an eligible Trustee upon retirement assuming various compensation and
years of service classifications. The estimated credited years of service for
Messrs. Reid, Ten Haken, Armstrong, Blum, Harkins, Vartabedian, Cragin, and
Thode are 11, 11, 8, 11, 5, 3, 3 and 3 respectively.
Highest Annual Compensation Paid by All Vista Funds
---------------------------------------------------
$40,000 $45,000 $50,000 $55,000
Years of
Service Estimated Annual Benefits upon Retirement
-------- -----------------------------------------
10 40,000 45,000 50,000 55,000
9 36,000 40,500 45,000 49,500
8 32,000 36,000 40,000 44,000
7 28,000 31,500 35,000 38,500
6 24,000 27,000 30,000 33,000
5 20,000 22,500 25,000 27,500
Effective August 21, 1995, the Trustees instituted a Deferred Compensation
Plan for Eligible Trustees (the "Deferred Compensation Plan") pursuant to which
each Trustee (who is not an employee of any of the Funds, the adviser,
Administrator or Distributor or any of their affiliates) may enter into
agreements with the Funds whereby payment of the Trustees' fees are deferred
until the payment date elected by the Trustee (or the Trustee's termination of
service). The deferred amounts are deemed invested in shares of the Fund on
whose Board the Trustee sits. The deferred amounts are paid out in a lump sum or
over a period of several years as elected by the Trustee at the time of
deferral. If a deferring Trustee dies prior to the distribution of amounts held
in the deferral account, the balance of the deferral account will be distributed
to the Trustee's designated beneficiary in a single lump sum payment as soon as
practicable after such deferring Trustee's death.
Messrs. Ten Haken, Thode and Vartabedian have each executed a deferred
compensation agreement for the 1996 calendar year and as of March 29, 1996 each
Eligible Trustee has contributed $4,700, $9,500 and $14,250 respectively.
The Declaration of Trust provides that the Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Trust, unless, as to liability to the Trust or its shareholders, it is finally
adjudicated that they engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in their offices or with
respect to any matter unless it is finally adjudicated that they did not act in
good faith in the reasonable belief that their actions were in the best interest
of the Trust. In the case of settlement, such indemnification will not be
provided unless it has been determined by a court or other body approving the
settlement or other disposition, or by a reasonable determination based upon a
review of readily available facts, by vote of a majority of disinterested
Trustees or in a written opinion of independent counsel, that such officers or
Trustees have not engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of their duties.
As of October 31, 1995, the Trustees and officers as a group owned less
than 1% of each Fund's outstanding shares, all of which were acquired for
investment purposes. For the fiscal year ended October 31, 1995, the Trust paid
its disinterested Trustees fees and expenses for all of the meetings of the
Board and any committees attended in the aggregate amount of approximately
$39,790 which amount is then apportioned between the Funds comprising the Trust.
40
<PAGE>
Adviser and Sub-Adviser
Chase acts as investment adviser to the Funds or Portfolios pursuant to
an Investment Advisory Agreement, dated as of May 6, 1996 (the "Advisory
Agreement"). Subject to such policies as the Board of Trustees may determine,
Chase is responsible for investment decisions for the Funds or Portfolios.
Pursuant to the terms of the Advisory Agreement, Chase provides the Funds or
Portfolios with such investment advice and supervision as it deems necessary for
the proper supervision of the Funds' or Portfolios' investments. The advisers
continuously provide investment programs and determine from time to time what
securities shall be purchased, sold or exchanged and what portion of the Funds'
or Portfolios' assets shall be held uninvested. The advisers to the Funds or
Portfolios furnish, at their own expense, all services, facilities and personnel
necessary in connection with managing the investments and effecting portfolio
transactions for the Funds or Portfolios. The Advisory Agreement for the Funds
or Portfolios will continue in effect from year to year only if such continuance
is specifically approved at least annually by the Board of Trustees or by vote
of a majority of a Fund's or Portfolio's outstanding voting securities and by a
majority of the Trustees who are not parties to the Advisory Agreement or
interested persons of any such party, at a meeting called for the purpose of
voting on such Advisory Agreement.
Under the Advisory Agreement, the adviser may utilize the
specialized portfolio skills of all its various affiliates, thereby providing
the Funds and Portfolios with greater opportunities and flexibility in
accessing investment expertise.
Pursuant to the terms of the Advisory Agreement and the sub-advisers'
agreements with the adviser, the adviser and sub-advisers are permitted to
render services to others. Each advisory agreement is terminable without penalty
by the Trust on behalf of the Funds on not more than 60 days', nor less than 30
days', written notice when authorized either by a majority vote of a Fund's
shareholders or by a vote of a majority of the Board of Trustees of the Trust,
or by the adviser or sub-adviser on not more than 60 days', nor less than 30
days', written notice, and will automatically terminate in the event of its
"assignment" (as defined in the 1940 Act). The advisory agreements provide that
the adviser or sub-adviser under such agreement shall not be liable for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of portfolio transactions
for the respective Fund, except for wilful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties thereunder.
With respect to the Equity Funds or Equity Portfolios, the equity research
team of the adviser looks for two key variables when analyzing stocks for
potential investment by equity portfolios: value and momentum. To uncover these
qualities, the team uses a combination of quantitative analysis, fundamental
research and computer technology to help identify undervalued stocks.
41
<PAGE>
In the event the operating expenses of the Funds, including all investment
advisory, administration and sub-administration fees, but excluding brokerage
commissions and fees, taxes, interest and extraordinary expenses such as
litigation, for any fiscal year exceed the most restrictive expense limitation
applicable to the Funds imposed by the securities laws or regulations thereunder
of any state in which the shares of the Funds are qualified for sale, as such
limitations may be raised or lowered from time to time, the adviser shall reduce
its advisory fee (which fee is described below) to the extent of its share of
such excess expenses. The amount of any such reduction to be borne by the
adviser shall be deducted from the monthly advisory fee otherwise payable with
respect to the Funds during such fiscal year; and if such amounts should exceed
the monthly fee, the adviser shall pay to a Fund its share of such excess
expenses no later than the last day of the first month of the next succeeding
fiscal year.
Under the Advisory Agreement, Chase may delegate a portion of its
responsibilities to a sub-adviser. In addition, the Advisory Agreement
provides that Chase may render services through its own employees or the
employees of one or more affiliated companies that are qualified to act as an
investment adviser of the Fund and are under the common control of Chase as long
as all such persons are functioning as part of an organized group of persons,
managed by authorized officers of Chase.
Chase, on behalf of the Funds or Portfolios (except the American Value
Fund), has entered into an investment sub-advisory agreement dated as of May 6,
1996 with Chase Asset Management, Inc. ("CAM"). With respect to the American
Value Fund, Chase has entered into an investment sub-advisory agreement with Van
Deventer & Hoch ("VDH") dated as of May 6, 1996. With respect to the day-to-day
management of the Fund or Portfolios, under the sub-advisory agreements, the
sub-advisers make decisions concerning, and place all orders for, purchases and
sales of securities and helps maintain the records relating to such purchases
and sales. The sub-advisers may, in their discretion, provide such services
through their own employees or the employees of one or more affiliated companies
that are qualified to act as an investment adviser to the Company under
applicable laws and are under the common control of Chase; provided that (i) all
persons, when providing services under the sub-advisory agreement, are
functioning as part of an organized group of persons, and (ii) such organized
group of persons is managed at all times by authorized officers of the
sub-advisers. This arrangement will not result in the payment of additional fees
by the Funds.
Chase, a wholly-owned subsidiary of The Chase Manhattan Corporation, a
registered bank holding company, is a commercial bank offering a wide range of
banking and investment services to customers throughout the United States and
around the world. The Chase Manhattan Corporation is the entity resulting from
the merger of The Chase Manhattan Corporation into Chemical Banking Corporation
on March 31, 1996. Chemical Banking Corporation was thereupon renamed The Chase
Manhattan Corporation. Also included among Chase's accounts are commingled trust
funds and a broad spectrum of individual trust and investment management
portfolios. These accounts have varying investment objectives.
CAM is a wholly-owned operating subsidiary of the Adviser. CAM is
registered with the Securities and Exchange Commission as an investment adviser
and was formed for the purpose of providing discretionary investment advisory
services to institutional clients and to consolidate Chase's investment
management function, and the same individuals who serve as portfolio managers
for CAM also serve as portfolio managers for Chase.
VDH has been in the investment counselling business since 1969 and is
ultimately controlled and equally owned by key professionals of VDH and Chase
Manhattan Corporation. VDH provides a wide range of asset management services to
individuals, corporations, private and charitable trusts, endowments,
foundations and retirement funds.
In consideration of the services provided by the adviser pursuant to the
Advisory Agreement, the adviser is entitled to receive from each Fund or
Portfolio an investment advisory fee computed daily and paid monthly based on a
rate equal to a percentage of such Fund's or Portfolio's average daily net
assets specified in the relevant Prospectuses.
42
<PAGE>
However, the adviser may voluntarily agree to waive a portion of the
fees payable to it on a month-to-month basis. For its services under its
sub-advisory agreement, CAM (or VDH in the case of the American Value
Fund) will be entitled to receive, with respect to each such Fund, such
compensation, payable by the adviser out of its advisory fee, as is described
in the relevant Prospectuses.
For the fiscal years ended October 31, 1993, 1994 and 1995, Chase was paid
or accrued the following investment advisory fees with respect to the following
Funds, and voluntarily waived the amounts in parentheses following such fees
with respect to each such period:
<TABLE>
<CAPTION>
Fiscal Year-Ended October 31,
---------------------------------------------------------------------------------
Fund 1993 1994 1995
paid/accrued waived paid/accrued waived paid/accrued waived
- -------------------------- ------------ ------------- ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Government
Income Fund $227,496 ($107,208) $351,680 ($234,236) $319,705 ($220,998)
Growth and
Income Fund $1,878,340 -- * -- * --
Capital Growth
Fund $430,099 -- * -- * --
Balanced Fund -- -- $103,522 ($103,522) $145,295 ($145,295)
Equity Income Fund -- -- $52,804 ($31,989) $44,277 ($35,433)
Large Cap Equity Fund $463,533 $463,533 $378,813 ($378,813) $250,452 ($250,452)
Bond Fund $166,164 $166,164 $167,780 ($167,780) $162,618 ($162,618)
Short-Term
Bond Fund $177,700 $177,700 $137,634 ($137,634) $85,353 ($85,353)
Small Cap Equity Fund -- -- -- -- $130,401 ($130,401)
</TABLE>
* On November 23, 1993, these Funds changed their structure to a Master/Feeder
Investment Fund Structure and do not have an investment adviser because the
Trust seeks to achieve the investment objective of the Funds by investing all of
the investable assets of each respective Fund in each respective Portfolio. The
Portfolios' investment adviser is Chase. For the period October 31, 1993 to
November 22, 1993, with respect to the Growth and Income Fund and the Capital
Growth Fund, Chase was paid or accrued, and voluntarily waived those amounts in
parentheses following such fees: $296,161 ($0.00) and $71,213 ($0.00),
respectively. With respect to the Growth and Income Portfolio and the Capital
Growth Portfolio, for the period November 23, 1993 to October 31, 1994, Chase
was paid or accrued the following investment advisory fees, and voluntarily
waived the amounts in parentheses following such fees: $4,805,067 ($0.00) and
$1,649,889 ($0.00), respectively. For the fiscal year ended October 31, 1995,
Chase was paid or accrued the following investment advisory fees, and
voluntarily waived the amounts in parentheses following such fees: $6,815,197
($0.00) and $3,563,194 ($0.00), respectively, with respect to such Portfolios.
Administrator
Pursuant to an Administration Agreement, dated as of March 31, 1996 as
(the "Administration Agreement"), Chase serves as administrator of the Trust.
Chase provides certain administrative services to the Trust and Portfolios,
including, among other responsibilities, coordinating the negotiation of
contracts and fees with, and the monitoring of performance and billing of, the
Trust's and Portfolio's independent contractors and agents; preparation for
signature by an officer of the Trust and Portfolios of all documents required to
be filed for compliance by the Trust and Portfolios with applicable laws and
regulations excluding those of the securities laws of various states; arranging
for the computation of performance data, including net asset value and yield;
responding to shareholder inquiries; and arranging for the maintenance of books
and records of the Trust and Portfolios and providing, at its own expense,
office facilities, equipment and personnel necessary to carry out its duties.
The administrator does not have any responsibility or authority for the
management of the Funds or Portfolios, the determination of investment policy,
or for any matter pertaining to the distribution of Fund shares.
Under the administration agreements Chase renders administrative services
to others. The administration agreements will continue in effect from year to
year with respect to each Fund or Portfolio only if such continuance is
specifically approved at least annually by the Board of Trustees or by vote of a
majority of such Fund's or Portfolio's outstanding voting securities and, in
either case, by a majority of the Trustees who are not parties to the
administration agreement or "interested persons" (as defined in the 1940 Act) of
any such party. The administration agreements are terminable without penalty by
the Trust on behalf of each Fund on 60 days' written notice when authorized
either by a majority vote of such Fund's shareholders or by vote of a majority
of the Board of Trustees, including a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust or Portfolios, or
by the Administrator on 60 days' written notice, and will automatically
terminate in the event of its "assignment" (as defined in the 1940 Act). The
administration agreements also provide that neither Chase or their personnel
shall be liable for any error of judgment or mistake of law or for any act or
omission in the administration or management of the Funds, except for willful
misfeasance, bad faith or gross negligence in the performance of its or their
duties or by reason of reckless disregard of its or their obligations and duties
under the administration agreements.
In addition, the administration agreements provide that, in the event the
operating expenses of any Fund or Portfolio, including all investment advisory,
administration and sub-administration fees, but excluding brokerage commissions
and fees, taxes, interest and extraordinary expenses such as litigation, for any
fiscal year exceed the most restrictive expense limitation applicable to that
Fund imposed by the securities laws or regulations thereunder of any state in
which the shares of such Fund are qualified for sale, as such limitations may be
raised or lowered from time to time, Chase shall reduce its administration fee
(which fee is described below) to the extent of its share of such excess
expenses. The amount of any such reduction to be borne by Chase shall be
deducted from the monthly administration fee otherwise payable to Chase during
such fiscal year; and if such amounts should exceed the monthly fee, Chase shall
pay to such Fund or Portfolio its share of such excess expenses no later than
the last day of the first month of the next succeeding fiscal year.
43
<PAGE>
In consideration of the services provided by Chase pursuant to the
administration agreements, the Administrator receives from each Fund a fee
computed and paid monthly at an annual rate equal to 0.10% of each of the Fund's
average daily net assets, on an annualized basis for the Fund's then-current
fiscal year, except that with respect to the Growth and Income Fund and Capital
Growth Fund, Chase receives from each of the Funds and the Portfolios a fee
computed daily and paid monthly at an annual rate equal to 0.05% of their
respective average daily net assets. Chase may voluntarily waive a portion of
the fees payable to it with respect to each Fund on a month-to-month basis.
For the fiscal years ended October 31, 1993, 1994 and 1995, Chase was paid
or accrued the following administration fees and voluntarily waived the amounts
in parentheses following such fees:
<TABLE>
<CAPTION>
Fiscal Year-Ended October 31,
------------------------------------------------------------------------------------
1993 1994 1995
Fund payable waived payable waived payable waived
- ---------------------------- ------------- ------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Government
Income Fund $ 75,832 ($35,736) $117,228 ($78,078) $106,559 ($ 76,094)
Growth and
Income Fund $469,785 none $637,264 none $830,077 ($252,586)
Capital Growth Fund $107,524 none $208,866 none $435,695 ($116,282)
Balanced Fund -- -- $ 20,704 ($20,704) $ 29,053 ($ 29,053)
Equity Income Fund -- -- $ 13,201 ($ 7,764) $ 11,069 ($ 8,855)
Large Cap Equity Fund * * $ 94,703 ($94,703) $ 62,613 ($ 62,613)
Bond Fund * * $ 55,927 ($55,927) $ 54,206 ($ 54,206)
Short-Term
Bond Fund * * $ 55,054 ($55,054) $ 34,141 ($ 34,141)
Small Cap Equity Fund -- -- -- -- $ 20,040 ($ 20,040)
</TABLE>
*For the fiscal year ended October 31, 1993, the Equity Fund, Bond Fund and
Short-Term Bond Fund Chase voluntarily waived its entire Administrative Fee of
$155,883, $55,388 and $71,080, respectively.
Distributor
Distribution Plan
The Trust has adopted separate plans of distribution pursuant to Rule
12b-1 under the 1940 Act (a "Distribution Plan") on behalf of certain classes of
shares of certain Funds as described in the Prospectuses, which provide such
classes of such Funds shall pay for distribution services a distribution fee
(the "Distribution Fee"), including payments to the Distributor, at annual rates
not to exceed the amounts set forth in their respective Prospectuses. The
Distributor may use all or any portion of such Distribution Fee to pay for Fund
expenses of printing prospectuses and reports used for sales purposes, expenses
of the preparation and printing of sales literature and other such
distribution-related expenses.
Class B shares pay a Distribution Fee of up to 0.75% of average daily net
assets. The Distributor currently expects to pay sales commissions to a dealer
at the time of sale of Class B shares of up to 4.00% of the purchase price of
the shares sold by such dealer. The Distributor will use its own funds (which
may be borrowed or otherwise financed) to pay such amounts. Because the
Distributor will receive a maximum Distribution Fee of 0.75% of average daily
net assets with respect to Class B shares, it will take the Distributor several
years to recoup the sales commissions paid to dealers and other sales expenses.
Some payments under the Distribution Plans may be used to compensate
broker-dealers with trail or maintenance commissions in an amount not to exceed
0.25% annualized of the average net asset values of Class A shares, or 0.25%
annualized of the average net asset value of the Class B shares, or 0.25%
annualized of the average net asset value of the shares of the American Value
Fund maintained in a Fund by such broker-dealers' customers. Trail or
maintenance commissions on Class B shares will be paid to broker-dealers
beginning the 13th month following the purchase of such Class B shares. Since
the distribution fees are not directly tied to expenses, the amount of
distribution fees paid by a Fund during any year may be more or less than actual
expenses incurred pursuant to the Distribution Plans. For this reason, this type
of distribution fee arrangement is characterized by the staff of the Securities
and Exchange Commission as being of the "compensation variety" (in contrast to
"reimbursement" arrangements by which a distributor's payments are directly
linked to its expenses). With respect to Class B shares, because of the 0.75%
annual limitation on the compensation paid to the Distributor during a fiscal
year, compensation relating to a large portion of the commissions attributable
to sales of Class B shares in any one year will be accrued and paid by a Fund
to the Distributor in fiscal years subsequent thereto. In determining whether to
purchase Class B shares, investors should consider that compensation payments
could continue until the Distributor has been
44
<PAGE>
fully reimbursed for the commissions paid on sales of Class B shares. However,
the Shares are not liable for any distribution expenses incurred in excess of
the Distribution Fee paid.
Each class of shares is entitled to exclusive voting rights with respect
to matters concerning its Distribution Plan.
Each Distribution Plan provides that it will continue in effect
indefinitely if such continuance is specifically approved at least annually by a
vote of both a majority of the Trustees and a majority of the Trustees who are
not "interested persons" (as defined in the 1940 Act) of the Trust and who have
no direct or indirect financial interest in the operation of the Distribution
Plans or in any agreement related to such Plan ("Qualified Trustees"). The
continuance of each Distribution Plan was most recently approved on October 13,
1995. Each Distribution Plan requires that the Trust shall provide to the Board
of Trustees, and the Board of Trustees shall review, at least quarterly, a
written report of the amounts expended (and the purposes therefor) under the
Distribution Plan. Each Distribution Plan further provides that the selection
and nomination of Qualified Trustees shall be committed to the discretion of the
disinterested Trustees (as defined in the 1940 Act) then in office. Each
Distribution Plan may be terminated at any time by a vote of a majority of the
Qualified Trustees or, with respect to a particular Fund, by vote of a majority
of the outstanding voting Shares of the class of such Fund to which it applies
(as defined in the 1940 Act). Each Distribution Plan may not be amended to
increase materially the amount of permitted expenses thereunder without the
approval of shareholders and may not be materially amended in any case without a
vote of the majority of both the Trustees and the Qualified Trustees. Each of
the Funds will preserve copies of any plan, agreement or report made pursuant to
a Distribution Plan for a period of not less than six years from the date of the
Distribution Plan, and for the first two years such copies will be preserved in
an easily accessible place.
For the fiscal year ended October 31, 1995, the Distributor was paid or
accrued the following Basic Distribution Fees and voluntarily waived the amounts
of such fees:
Fund Paid/Accrued Waived
- --------------------------- ------------ -------
U.S. Government Income Fund
A Shares $ 246,262 $49,250
B Shares $ 60,477 none
Growth and Income Fund
A Shares $3,610,606 none
B Shares $1,619,344 none
Capital Growth Fund
A Shares $1,673,901 none
B Shares $1,501,615 none
Balanced Fund
A Shares $ 60,657 $12,130
B Shares $ 35,952 none
Equity Income Fund $ 27,673 $ 5,535
Large Cap Equity Fund $ 156,533 $55,921
Bond Fund $ 135,515 $88,485
Short-Term Bond Fund $ 85,353 $77,817
Small Cap Equity Fund
A Shares $ 35,265 $ 8,946
B Shares $ 44,661 none
With respect to the Class A shares of the Funds, the Basic
Distribution Fee was allocated as follows:
<TABLE>
<CAPTION>
Printing, Postage Sales Advertising &
Fund and Handling Compensation Administrative Filings
- --------------------------- ----------------- ------------ ----------------------
<S> <C> <C> <C>
U.S. Government Income Fund $ 42,141 $ 120,768 $ 34,063
Growth and Income Fund $772,309 $2,213,301 $624,274
Capital Growth Fund $358,047 $1,026,101 $289,417
Balanced Fund $ 10,380 $ 29,747 $ 8,390
Equity Income Fund $ 4,735 $ 13,571 $ 3,828
Large Cap Equity Fund $ 21,521 $ 61,675 $ 17,396
Bond Fund $ 10,060 $ 28,829 $ 8,131
Short-Term Bond Fund $ 1,612 $ 4,620 $ 1,303
Small Cap Equity Fund $ 5,630 $ 16,134 $ 4,551
</TABLE>
Distribution and Sub-Administration Agreement
The Trust has entered into a Distribution and Sub-Administration Agreement
dated August 24, 1995, (the "Distribution Agreement") with the Distributor,
pursuant to which the Distributor acts as the Funds' exclusive underwriter,
provides certain administration services and promotes and arranges for the sale
of each class of Shares. The Distributor is a wholly-owned subsidiary of
BISYS Fund Services, Inc. The Distribution Agreement provides that the
Distributor will bear the expenses of printing, distributing and filing
prospectuses and statements of additional information and reports used for sales
purposes, and of preparing and printing sales literature and advertisements not
paid for by the Distribution Plan. The Trust pays for all of the expenses for
qualification of the shares of each Fund for sale in connection with the public
offering of such shares, and all legal expenses in connection therewith. In
addition, pursuant to the Distribution Agreement, the Distributor provides
certain sub-administration services to the Trust, including providing officers,
clerical staff and office space.
The Distribution Agreement is currently in effect and will continue in
effect with respect to each Fund only if such continuance is specifically
approved at least annually by the Board of Trustees or by vote of a majority of
such Fund's outstanding voting securities and, in either case, by a majority of
the Trustees who are not parties to the Distribution Agreement or "interested
persons" (as defined in the 1940 Act) of any such party. The Distribution
45
<PAGE>
Agreement is terminable without penalty by the Trust on behalf of each Fund on
60 days' written notice when authorized either by a majority vote of such Fund's
shareholders or by vote of a majority of the Board of Trustees of the Trust,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Trust, or by the Distributor on 60 days' written
notice, and will automatically terminate in the event of its "assignment" (as
defined in the 1940 Act). The Distribution Agreement also provides that neither
the Distributor nor its personnel shall be liable for any act or omission in the
course of, or connected with, rendering services under the Distribution
Agreement, except for willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations or duties.
In the event the operating expenses of any Fund, including all investment
advisory, administration and sub-administration fees, but excluding brokerage
commissions and fees, taxes, interest and extraordinary expenses such as
litigation, for any fiscal year exceed the most restrictive expense limitation
applicable to that Fund imposed by the securities laws or regulations thereunder
of any state in which the shares of such Fund are qualified for sale, as such
limitations may be raised or lowered from time to time, the Distributor shall
reduce its sub-administration fee with respect to such Fund (which fee is
described below) to the extent of its share of such excess expenses. The amount
of any such reduction to be borne by the Distributor shall be deducted from the
monthly sub-administration fee otherwise payable with respect to such Fund
during such fiscal year; and if such amounts should exceed the monthly fee, the
Distributor shall pay to such Fund its share of such excess expenses no later
than the last day of the first month of the next succeeding fiscal year.
In consideration of the sub-administration services provided by the
Distributor pursuant to the Distribution Agreement, the Distributor receives an
annual fee, payable monthly, of 0.05% of the net assets of each Fund. However,
the Distributor has voluntarily agreed to waive a portion of the fees payable to
it under the Distribution Agreement with respect to each Fund on a
month-to-month basis. For the fiscal years ended October 31, 1993, 1994 and 1995
the Distributor was paid or accrued the following sub-administration fees under
the Distribution Agreement, and voluntarily waived the amounts in parentheses
following such fees:
<TABLE>
<CAPTION>
Fiscal Year-Ended October 31,
--------------------------------------------------------------------------------
1993 1994 1995
Fund payable waived payable waived payable waived
- ----------------------- ----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury
Income Fund $ 37,917 ($17,868) $ 58,614 none $ 53,284 none
Growth and Income
Fund $234,794 none $637,264 none $830,077 none
Capital Growth Fund $ 53,763 none $208,866 none $435,488 none
Balanced Fund -- -- $ 10,352 ($10,352) $ 14,527 ($14,527)
Equity Income Fund -- -- $ 6,601 none $ 5,535 none
Large Cap Equity Fund * * $ 47,352 none $ 31,306 none
Bond Fund * * $ 27,963 none $ 27,103 none
Short-Term Bond Fund * * $ 27,527 none $ 17,071 none
Small Cap Equity Fund -- -- -- -- $ 10,030 $ 3,488
</TABLE>
* For the fiscal year ended June 30, 1992, Trinity Equity Fund, Trinity Bond
Fund and Trinity Short-Term Bond Fund paid Trinity Capital Management
distribution and sub-administration fees equal to $98,825, $39,198 and $75,404,
respectively.
Shareholder Servicing Agents, Transfer Agent and Custodian
The Trust has entered into a shareholder servicing agreement (a "Servicing
Agreement") with each Shareholder Servicing Agent to provide certain services
including but not limited to the following: answer customer inquiries regarding
account status and history, the manner in which purchases and redemptions of
shares may be effected for the Fund as to which the Shareholder Servicing Agent
is so acting and certain other matters pertaining to the Fund; assist
shareholders in designating and changing dividend options, account designations
and addresses; provide necessary personnel and facilities to establish and
maintain shareholder accounts and records; assist in processing purchase and
redemption transactions; arrange for the wiring of funds; transmit and receive
funds in connection with customer orders to purchase or redeem shares; verify
and guarantee shareholder signatures in connection with redemption orders and
transfers and changes in shareholder-designated accounts; furnish (either
separately or on an integrated basis with other reports sent to a shareholder by
a Shareholder Servicing Agent) quarterly and year-end statements and
confirmations of purchases and redemptions; transmit, on behalf of the Fund,
proxy statements, annual reports, updated prospectuses and other communications
to shareholders of the Fund; receive, tabulate and transmit to the Fund proxies
executed by shareholders with respect to meetings of shareholders of the Fund;
and provide such other related services as the Fund or a shareholder may
request. Shareholder servicing agents may be required to register pursuant to
state securities law.
46
<PAGE>
Each Shareholder Servicing Agent may voluntarily agree from time to time to
waive a portion of the fees payable to it under its Servicing Agreement with
respect to each Fund on a month-to-month basis. For the fiscal years ended
October 31, 1993, 1994 and 1995, fees payable to the Shareholder Servicing
Agents (all of which currently are related parties) and the amounts voluntarily
waived for each such period (as indicated in parentheses), were as follows:
<TABLE>
<CAPTION>
Fiscal Year-Ended October 31,
-------------------------------------------------------------------------------------
1993 1994 1995
Fund payable waived payable waived payable waived
- --------------------- ------------- -------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Government
Income Fund
Class A $ 211,063 ($99,758) $ 285,388 ($177,004) $ 246,251 ($197,001)
Class B n/a n/a $7,681 -- $20,153 --
Growth and Income
Fund
Class A $1,126,760 -- $2,999,532 -- $3,610,762 --
Class B n/a n/a $ 186,791 -- $ 539,805 --
Capital Growth Fund
Class A $ 261,208 -- $ 936,977 -- $1,674,668 --
Class B n/a n/a $ 107,015 -- $ 503,805 --
Balanced Fund
Class A n/a n/a $ 47,750 ($ 45,962) $ 60,650 ($ 48,520)
Class B n/a n/a $ 4,011 -- $ 11,983 --
Equity Income Fund
Class A n/a n/a $ 33,030 ($ 22,131) $ 27,673 ($ 26,964)
Small Cap Equity Fund
Class A n/a n/a n/a -- --
Class B n/a n/a n/a $ 14,689 --
</TABLE>
The Trust has also entered into a Transfer Agency Agreement with DST
Systems, Inc. ("DST") pursuant to which DST acts as transfer agent for the
Trust. DST's address is 210 West 10th Street, Kansas City, MO 64105.
Pursuant to a Custodian Agreement, Chase acts as the custodian of the
assets of each Fund and receives such compensation as is from time to time
agreed upon by the Trust and Chase. As custodian, Chase provides oversight and
record keeping for the assets held in the portfolios of each Fund. Chase also
provides fund accounting services for the income, expenses and shares
outstanding for such Funds. Chase is located at 3 Metrotech Center, Brooklyn, NY
11245. Investors Bank and Trust Co., One First Canadian Place, Toronto, Canada,
5X1C8, provides similar services for the Capital Growth and Growth and Income
Portfolios.
INDEPENDENT ACCOUNTANTS
The financial statements incorporated herein by reference from the
Trust's Annual Reports to Shareholders for the fiscal year ended October 31,
1995, and the related financial highlights which appear in the Prospectuses,
have been incorporated herein and included in the Prospectuses in reliance on
the reports of Price Waterhouse LLP, 1177 Avenue of the Americas, New York,
New York 10036, independent accountants of the Funds, given on the authority of
said firm as experts in accounting and auditing. Price Waterhouse LLP provides
the Funds with audit services, tax return preparation and assistance and
consultation with respect to the preparation of filings with the Securities and
Exchange Commission.
The financial statements incorporated herein by reference from The
Hanover Investment Funds, Inc.'s Annual Reports to Shareholders for the fiscal
year ended November 30, 1995, and the related financial highlights which appear
in the Prospectuses, have been incorporated herein and included in the
Prospectuses in reliance on the reports of KPMG Peat Marwick LLP, independent
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing. KPMG Peat Marwick LLP has offices at 345 Park Avenue,
New York, New York 10154.
GENERAL INFORMATION
Description of Shares, Voting Rights and Liabilities
Mutual Fund Group is an open-end, non-diversified management investment
company organized as Massachusetts business trust under the laws of the
Commonwealth of Massachusetts in 1987. The Trust currently consists of 16 series
of shares of beneficial interest, par value $.001 per share. With respect to
certain Funds, the Trust may offer more than one class of shares. The Trust has
reserved the right to create and issue additional series or classes. Each share
of a series or class represents an equal proportionate interest in that series
or class with each other share of that series or class. The shares of each
series or class participate equally in the earnings, dividends and assets of the
particular series or class. Expenses of the Trust which are not attributable to
a specific series or class are allocated amount all the series in a manner
believed by management of the Trust to be fair and equitable. Shares have no
pre-emptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each share held. Shares of each series or class generally vote together,
except when required under federal securities laws to vote separately on matters
that only affect a particular class, such as the approval of distribution plans
for a particular class. With respect to shares purchased through a Shareholder
Servicing Agent and, in the event written proxy instructions are not received by
a Fund or its designated agent prior to a shareholder meeting at which a proxy
is to be voted and the shareholder does not attend the meeting in person, the
Shareholder Servicing Agent for such shareholder will be authorized pursuant to
an applicable agreement with the shareholder to vote the shareholder's
outstanding shares in the same proportion as the votes cast by other Fund
shareholders represented at the meeting in person or by proxy.
47
<PAGE>
Certain Funds offer both Class A and Class B shares. The classes of
shares have several different attributes relating to sales charges and expenses,
as described herein and in this Prospectuses. In addition to such differences,
expenses borne by each class may differ slightly because of the allocation of
other class-specific expenses. For example, a higher transfer agency fee may be
imposed on Class B shares than on Class A shares. The relative impact of initial
sales charges, contingent deferred sales charges, and ongoing annual expenses
will depend on the length of time a share is held.
Selected dealers and financial consultants may receive different levels of
compensation for selling one particular class of shares rather than another.
The Trust is not required to hold annual meetings of shareholders but will
hold special meetings of shareholders of a series or class when, in the judgment
of the Trustees, it is necessary or desirable to submit matters for a
shareholder vote. Shareholders have, under certain circumstances, the right to
communicate with other shareholders in connection with requesting a meeting of
shareholders for the purpose of removing one or more Trustees. Shareholders also
have, in certain circumstances, the right to remove one or more Trustees without
a meeting. No material amendment may be made to the Trust's Declaration of Trust
without the affirmative vote of the holders of a majority of the outstanding
shares of each portfolio affected by the amendment. The Trust's Declaration of
Trust provides that, at any meeting of shareholders of the Trust or of any
series or class, a Shareholder Servicing Agent may vote any shares as to which
such Shareholder Servicing Agent is the agent of record and which are not
represented in person or by proxy at the meeting, proportionately in accordance
with the votes cast by holders of all shares of that portfolio otherwise
represented at the meeting in person or by proxy as to which such Shareholder
Servicing Agent is the agent of record. Any shares so voted by a Shareholder
Servicing Agent will be deemed represented at the meeting for purposes of quorum
requirements. Shares have no preemptive or conversion rights. Shares, when
issued, are fully paid and non-assessable, except as set forth below. Any series
or class may be terminated (i) upon the merger or consolidation with, or the
sale or disposition of all or substantially all of its assets to, another
entity, if approved by the vote of the holders of two-thirds of its outstanding
shares, except that if the Board of Trustees recommends such merger,
consolidation or sale or disposition of assets, the approval by vote of the
holders of a majority of the series' or class' outstanding shares will be
sufficient, or (ii) by the vote of the holders of a majority of its outstanding
shares, or (iii) by the Board of Trustees by written notice to the series' or
class' shareholders. Unless each series and class is so terminated, the Trust
will continue indefinitely.
Stock certificates are issued only upon the written request of a
shareholder, subject to the policies of the investor's Shareholder Servicing
Agent, but the Trust will not issue a stock certificate with respect to shares
that may be redeemed through expedited or automated procedures established by a
Shareholder Servicing Agent. No certificates are issued for Class B shares due
to their conversion feature.
48
<PAGE>
Under Massachusetts law, shareholders of a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Trust and
provides for indemnification and reimbursement of expenses out of the Trust
property for any shareholder held personally liable for the obligations of the
Trust. The Trust's Declaration of Trust also provides that the Trust shall
maintain appropriate insurance (for example, fidelity bonding and errors and
omissions insurance) for the protection of the Trust, its shareholders,
Trustees, officers, employees and agents covering possible tort and other
liabilities. Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its obligations.
The Trust's Declaration of Trust further provides that obligations of the
Trust are not binding upon the Trustees individually but only upon the property
of the Trust and that the Trustees will not be liable for any action or failure
to act, errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
The Board of Trustees has adopted a Code of Ethics addressing personal
securities transactions by investment personnel and access persons and other
related matters. The Code of Ethics substantially conforms to the
recommendations made by the Investment Company Institute ("ICI") (except where
noted) and includes such provisions as:
(bullet) Prohibitions on investment personnel acquiring securities
in initial offerings;
(bullet) A requirement that access persons obtain prior to acquiring
securities in a private placement and that the officer
granting such approval have no interest in the issuer making
the private placement;
(bullet) A restriction on access persons executing transactions for
securities on a recommended list until 14 days after
distribution of that list;
(bullet) A prohibition on access persons acquiring securities that are
pending execution by one of the Funds or Portfolios until 7
days after the transactions of the Funds or Portfolios are
completed;
(bullet) A prohibition of any buy or sell transaction in a particular
security in a 30-day period, except as may be permitted in
certain hardship cases or exigent circumstances where prior
approval is obtained. This provision differs slightly from the
ICI recommendation;
(bullet) A requirement for pre-clearance of any buy or sell
transaction in a particular security after 30 days, but
within 60 days;
(bullet) A requirement that any gift exceeding $75.00 from a
customer must be reported to the appropriate compliance
officer;
(bullet) A requirement that access persons submit in writing any
request to serve as a director or trustee of a publicly
traded company;
(bullet) A requirement that all securities transactions in excess of
$1,000 be pre-cleared, except that if a person has engaged in
more than $10,000 of securities transactions in a calendar
quarter all securities of such person require pre-clearance
(this de minimus exception differs slightly from the ICI
recommendations);
(bullet) A requirement that all access persons direct their
broker-dealer to submit duplicate confirmation and customer
statements to the appropriate compliance unit; and
(bullet) A requirement that all access persons sign a Code of Ethics
acknowledgment, affirming that they have read and understood
the Code and submit a personal security holdings report upon
commencement of employment or status and a personal security
transaction report within 10 days of each calendar quarter
thereafter.
49
<PAGE>
Principal Holders
As of January 31, 1996, the following persons owned of record 5%
or more of the outstanding shares of the following classes or Funds:
Vista US Government Income Fund - A Shares
Chase Manhattan Bank N/A 8.85%
Global SEC Services Omnibus
Attn: Alex Kwong
3 Chase Metro Tech Center
7th Floor
Brooklyn, NY 11245-0002
Carrier ILA Containter Royalty 9.99%
Fund
One Evertrust Plaza
Jersey City, NJ 07302-3051
Trulin & CO. 7.96%
Chase Lincoln First Bank
Attn: Melodie R. Sparks-Stewart
Mutual Funds/T-C
PO Box 1412
Rochester, NY 14603-1412
Carrier ILA CFS Trust Fund 14.99%
c/o CCC Inc.
One Evertrust Plaza
Jersey City, NJ 07302-3051
Testa and CO. 5.97%
c/o Chase Manhattan Bank NA
Attn: Mutual Funds T-C
PO Box 1412
Rochester, NY 14603-1412
Vista Growth & Income - A Shares
CMB Thrift Incentive Plan 14.16%
(Fund 50)
Attn: Jeff Salazar
3 Metrotech Center 5th Floor
Brooklyn, NY 11245-0001
Vista Growth & Income - Institutional Shares
Davis and Company 65.58%
c/o Marshall & Ilsley Trust Co.
PO Box 8020
Appleton, WI 54913-8020
Chase Manhattan Bank N/A 34.41%
Global SEC Services Omnibus
Attn: Alex Kwong
3 Chase Metro Tech Center
7th Floor
Brooklyn NY 11245-0002
Vista Capital Growth Fund - A Shares
Charles Schwab & CO. Inc. 7.99%
Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Vista Capital Growth - Institutional Shares
Bankers Trust of the Southwest 67.12%
as TTEE for the MAPCO Inc. & Subsid.
Profit Sharing & Savings Plan
Attn: Deborah L. Turri
648 Grassmere Park Drive
Nashville, TN 37211-3658
Chase Manhattan Bank N/A 32.88%
Global SEC Services Omnibus
Attn: Alex Kwong
3 Chase Metro Tech Center
7th Floor
Brooklyn, NY 11245-0002
Vista Small Cap Equity Fund - A Shares
Charles Schwab & CO. Inc. 12.91%
Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94101-4122
Jupiter & Co. 11.74%
c/o Investors Bank Trust Co.
PO Box 1537 Top 57
Boston, MA 02205-1537
Vista Small Cap Equity - Institutional Fund
Vista Broker Dealer Services 100.00%
c/o Fund Administration
3435 Stelzer Road
Columbus, OH 43219-6004
Vista Balanced Fund - A Shares
Trulin & CO. 8.57%
Chase Lincoln First Bank
One Lincoln First Square
Rochester, NY 14643-0001
Chase Manhattan Bank N/A 21.55%
Global SEC Services Omnibus
Attn: Alex Kwong
3 Chase Metro Tech Center
7th Floor
Brooklyn, NY 11245-0002
Testa and CO. 21.55%
c/o Chase Manhattan Bank NA
Attn: Mutual Funds/T-C
PO Box 1412
Rochester, NY 14603-1412
Vista Large Cap Equity Fund - Institutional Shares
Liva & Company 6.01%
c/o Chase Lincoln First Bank NA
Trust Securities - Mutual Fund
Attn: Ed Sheidlower
One Lincoln First Square
Rochester, NY 14643-0001
Trulin & CO. 79.49%
c/o Chase Lincoln First NA
Trust Securities/ Mutual Funds
Attn: Ed Sheidlower
One Lincoln First Square
Rochester, NY 14643-0001
Testa and CO. 8.31%
c/o Chase Manhattan Bank NA
Attn: Mutual Funds/T-C
PO Box 1412
Rochester, NY 14603-1412
Vista Bond Fund
Trulin & CO. 91.70%
c/o Chase Lincoln First Bank NA
Trust Securities/Mutual Funds
Attn: Ed Sheidlower
One Lincoln First Square
Rochester, NY 14643-0001
Vista Short Term Bond Fund - Institutional Funds
Trulin & CO. 73.31%
c/o Chase Lincoln First Bank NA
Trust Securities/Mutual Funds
Attn: Ed Sheidlower
One Lincoln First Square
Rochester, NY 14643-0001
Testa and CO. 9.06%
c/o Chase Manhattan Bank NA
Attn: Mutual Funds/T-C
PO Box 1412
Rochester, NY 14603-1412
Financial Statements
The 1995 Annual Report to Shareholders of each Fund other than the Vista
U.S. Government Securities Fund and Vista American Value Fund, including the
reports of independent accounts, financial highlights and financial statements
for the fiscal year ended October 31, 1995 contained therein, are incorporated
herein by reference. The 1995 Annual Report to Shareholders of each of The
Hanover U.S. Government Securities Fund and The Hanover American Value Fund,
each a series of The Hanover Investment Funds, Inc., including the reports of
independent auditors, financial highlights and financial statements for the
fiscal year ended November 30, 1995 contained therein, are incorporated herein
by reference.
Specimen Computations of Offering Prices Per Share
U.S. Treasury Income Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest
at October 31, 1995...............................................$11.40
Maximum Offering Price per Share ($11.40 divided by .955)
(reduced on purchases of $100,000 or more)........................$11.94
B Shares:
Net Asset Value and Redemption Price per Share of Beneficial
Interest at October 31,1995 and Income Fund (specimen computations)
Growth and Income Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial
50
<PAGE>
Interest at October 31, 1995......................................$34.96
Maximum Offering Price per Share ($34.96 divided by .9525)
(reduced on purchases of $100,000 or more)........................$36.70
B Shares:
Net Asset Value and Redemption Price per Share of Beneficial
Interest at October 31, 1995......................................$34.81
Capital Growth Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial
Interest at October 31, 1995......................................$35.65
Maximum Offering Price per Share ($35.65 divided by .9525)
(reduced on purchases of $100,000 or more.........................$37.43
B Shares:
Net Asset Value and Redemption Price per Share of Beneficial
Interest at October 31,1995.......................................$35.39
Equity Income Fund (specimen computations)
A Shares
Net Asset Value and Redemption Price per Share of Beneficial
Interest at October 31, 1995......................................$13.39
Maximum Offering Price per Share ($13.39 divided by .955)
(reduced on purchases of $100,000 or more.........................$14.02
Balanced Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial
Interest at October 31, 1995......................................$12.45
Maximum Offering Price per Share ($12.45 divided by .955)
(reduced on purchases of $100,000 or more)........................$13.04
B Shares:
Net Asset Value and Redemption Price per Share of Beneficial
Interest at October 31, 1995......................................$12.36
51
<PAGE>
Large Cap Equity Fund (specimen computations)
Institutional Shares:
Net Asset Value and Redemption Price per Share of Beneficial
Interest at October 31, 1995......................................$12.24
Bond Fund (specimen computations)
Institutional Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest
at October 31, 1995...............................................$10.91
Short-Term Bond Fund (specimen computations)
Institutional Shares:
Net Asset Value and Redemption Price per Share of Beneficial
Interest at October 31, 1995......................................$10.08
Small Cap Equity Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial
Interest at October 31, 1995......................................$15.07
Maximum Offering Price per Share ($15.07 divided by .9525)
(reduced on purchases of $100,000 or more)........................$15.82
B Shares:
Net Asset Value and Redemption Price per Share of Beneficial
Interest at October 31, 1995......................................$15.01
52
<PAGE>
APPENDIX A
DESCRIPTION OF CERTAIN OBLIGATIONS
ISSUED OR GUARANTEED BY U.S. GOVERNMENT
AGENCIES OR INSTRUMENTALITIES
Federal Farm Credit System Notes and Bonds -- are bonds issued by a
cooperatively owned nationwide system of banks and associations supervised by
the Farm Credit Administration, an independent agency of the U.S. Government.
These bonds are not guaranteed by the U.S. Government.
Maritime Administration Bonds -- are bonds issued and provided by the
Department of Transportation of the U.S. Government are guaranteed by the U.S.
Government.
FNMA Bonds -- are bonds guaranteed by the Federal National Mortgage
Association. These bonds are not guaranteed by the U.S. Government.
FHA Debentures -- are debentures issued by the Federal Housing
Administration of the U.S. Government and are guaranteed by the U.S. Government.
FHA Insured Notes -- are bonds issued by the Farmers Home Administration
of the U.S. Government and are guaranteed by the U.S. Government.
GNMA Certificates -- are mortgage-backed securities which represent a
partial ownership interest in a pool of mortgage loans issued by lenders such as
mortgage bankers, commercial banks and savings and loan associations. Each
mortgage loan included in the pool is either insured by the Federal Housing
Administration or guaranteed by the Veterans Administration and therefore
guaranteed by the U.S. Government. As a consequence of the fees Paid to GNMA and
the issuer of GNMA Certificates, the coupon rate of interest of GNMA
Certificates is lower than the interest paid on the VA-guaranteed or FHA-insured
mortgages underlying the Certificates. The average life of a GNMA Certificate is
likely to be substantially less than the original maturity of the mortgage pools
underlying the securities. Prepayments of principal by mortgagors and mortgage
foreclosures may result in the return of the greater part of principal invested
far in advance of the maturity of the mortgages in the pool. Foreclosures impose
no risk to principal investment because of the GNMA guarantee. As the prepayment
rate of individual mortgage pools will vary widely, it is not possible to
accurately predict the average life of a particular issue of GNMA Certificates.
The yield which will be earned on GNMA Certificates may vary from their coupon
rates for the following reasons: (i) Certificates may be issued at a premium or
discount, rather than at par; (ii) Certificates may trade in the secondary
market at a premium or discount after issuance; (iii)
A-1
<PAGE>
interest is earned and compounded monthly which has the effect of raising the
effective yield earned on the Certificates; and (iv) the actual yield of each
Certificate is affected by the prepayment of mortgages included in the mortgage
pool underlying the Certificates. Principal which is so prepaid will be
reinvested although possibly at a lower rate. In addition, prepayment of
mortgages included in the mortgage pool underlying a GNMA Certificate purchased
at a premium could result in a loss to a Fund. Due to the large amount of GNMA
Certificates outstanding and active participation in the secondary market by
securities dealers and investors, GNMA Certificates are highly liquid
instruments. Prices of GNMA Certificates are readily available from securities
dealers and depend on, among other things, the level of market rates, the
Certificate's coupon rate and the prepayment experience of the pool of mortgages
backing each Certificate. If agency securities are purchased at a premium above
principal, the premium is not guaranteed by the issuing agency and a decline in
the market value to par may result in a loss of the premium, which may be
particularly likely in the event of a prepayment. When and if available, U.S.
Government obligations may be purchased at a discount from face value.
GNMA FHLMC Bonds and GNMA FNMA Bonds -- are mortgage-backed bonds issued
by the Federal Home Loan Mortgage Corporation and the Federal National Mortgage
Association, respectively, and are guaranteed by the U.S. Government.
GSA Participation Certificates -- are participation certificates issued by
the General Services Administration of the U.S. Government and are guaranteed by
the U.S. Government.
New Communities Debentures -- are debentures issued in accordance with the
provisions of Title IV of the Housing and Urban Development Act of 1968, as
supplemented and extended by Title VII of the Housing and Urban Development Act
of 1970, the payment of which is guaranteed by the U.S. Government.
Public Housing Bonds -- are bonds issued by public housing and urban
renewal agencies in connection with programs administered by the Department of
Housing and Urban Development of the U.S. Government, the payment of which is
secured by the U.S. Government.
Penn Central Transportation Certificates -- are certificates issued by
Penn Central Transportation and guaranteed by the U.S. Government.
SBA Debentures -- are debentures fully guaranteed as to principal and
interest by the Small Business Administration of the U.S. Government.
A-2
<PAGE>
Washington Metropolitan Area Transit Authority Bonds -- are bonds issued
by the Washington Metropolitan Area Transit Authority and guaranteed by the U.S.
Government.
FHLMC Bonds -- are bonds issued and guaranteed by the Federal Home Loan
Mortgage Corporation. These bonds are not guaranteed by the U.S. Government.
Federal Home Loan Bank Notes and Bonds -- are notes and bonds issued by
the Federal Home Loan Bank System and are not guaranteed by the U.S. Government.
Student Loan Marketing Association ("Sallie Mae") Notes and bonds -- are
notes and bonds issued by the Student Loan Marketing Association and are not
guaranteed by the U.S. Government.
D.C. Armory Board Bonds -- are bonds issued by the District of Columbia
Armory Board and are guaranteed by the U.S. Government.
Export-Import Bank Certificates -- are certificates of beneficial interest
and participation certificates issued and guaranteed by the Export-Import Bank
of the U.S. and are guaranteed by the U.S. Government.
In the case of securities not backed by the "full faith and credit" of the
U.S. Government, the investor must look principally to the agency issuing or
guaranteeing the obligation for ultimate repayment, and may not be able to
assert a claim against the U.S. Government itself in the event the agency or
instrumentality does not meet its commitments.
Investments may also be made in obligations of U.S. Government agencies or
instrumentalities other than those listed above.
A-3
<PAGE>
APPENDIX B
DESCRIPTION OF RATINGS
A description of the rating policies of Moody's, S&P and Fitch with respect to
bonds and commercial paper appears below.
Moody's Investors Service's Corporate Bond Ratings
Aaa--Bonds which are rated "Aaa" are judged to be of the best quality and carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa--Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated "A" possess many favorable investment qualities and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated "Baa" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated "Ba" are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguared
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated "B" generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance and
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated "Caa" are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated "Ca" represent obligations which are speculative in
high degree.
B-1
<PAGE>
Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated "C" are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numercal modifiers "1", "2", and "3" to certain of its rating
classifications. The modifier "1" indicates that the security ranks in the
higher end of its generic rating category; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates that the issue ranks in the
lower end of its generic rating category.
Standard & Poor's Ratings Group Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to repay principal and pay
interest.
AA--Bonds rated "AA" also qualify as high quality debt obligations. Capacity to
pay principal and interest is very strong, and differs from "AAA" issues only in
small degree.
A--Bonds rated "A" have a strong capacity to repay principal and pay interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Bonds rated "BBB" are regarded as having an adequate capacity to repay
principal and pay interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to repay principal and pay interest for
bonds in this category than for higher rated categories.
BB-B-CCC-CC-C--Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the
obligations. BB indicates the lowest degree of speculation and C the highest
degree of speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.
CI--Bonds rated "CI" are income bonds on which no interest is being paid.
D--Bonds rated "D" are in default. The "D" category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired unless S&P believes that such payments
will be made during such grace period. The "D" rating is also used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
The ratings set forth above may be modified by the addition of a plus or minus
to show relative standing within the major rating categories.
Moody's Investors Service's Commercial Paper Ratings
B-2
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Prime-1--Issuers (or related supporting institutions) rated "Prime-1" have a
superior ability for repayment of senior short-term debt obligations. "Prime-1"
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries, high
rates of return on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and
well-established access to a range of financial markets and assured sources of
alternate liquidity.
Prime-2--Issuers (or related supporting institutions) rated "Prime-2" have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternative liquidity is maintained.
Prime-3--Issuers (or related supporting institutions) rated "Prime-3" have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and the requirement for relatively high financial
leverage. Adequate alternate liquidity is maintained.
Not Prime--Issuers rated "Not Prime" do not fall within any of the Prime rating
categories.
Standard & Poor's Ratings Group Commercial Paper Ratings
A S&P commercial paper rating is current assessment of the likelihood of timely
payment of debt having an original maturity of no more than 365 days. Ratings
are graded in several categories, ranging from "A-1" for the highest quality
obligations to "D" for the lowest. The four categories are as follows:
A-1--This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".
A-3--Issues carrying this designation have adequate capacity for timely payment.
They are, however, somewhat more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higger designations.
B--Issues rated "B" are regarded as having only speculative capacity for timely
payment.
C--This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D--Debt rated "D" is in payment default. The "D" rating category is used when
interest
B-3
<PAGE>
payments or principal payments are not made on the date due, even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period.
Fitch Bond Ratings
AAA--Bonds rated AAA by Fitch are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA--Bonds rated AA by Fitch are considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issues is generally
rated F-1+ by Fitch
A--Bonds rated A by Fitch are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB--Bonds rated BBB by Fitch are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse consequences on
these bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for bonds
with higher ratings.
Plus and minus signs are used by Fitch to indicate the relative position of a
credit within a rating category. Plus and minus signs, however, are not used in
the AAA category.
Fitch Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
Fitch's short-term ratings are as follows:
F-1+--Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.
F-1--Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.
B-4
<PAGE>
F-2--Issues assigned this rating have a satisfactory degree of assurance for
timely payment but the margin of safety is not as great as for issues assigned
F-1+ and F-1 ratings.
F-3--Issues assigned this rating have characteristics suggesting that the degree
of assurance for timely payment is adequate, although near-term adverse changes
could cause these securities to be rated below investment grade.
LOC--The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.
Like higher rated bonds, bonds rated in the Baa or BBB categories are considered
to have adequate capacity to pay principal and interest. However, such bonds may
have speculative characteristics, and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case with higher grade bonds.
After purchase by a Fund, a security may cease to be rated or its rating may be
reduced below the minimum required for purchase by such Fund. Neither event will
require a sale of such security by a Fund. However, a Fund's investment manager
will consider such event in its determination of whether such Fund should
continue to hold the security. To the extent the ratings given by Moody's, S&P
or Fitch may change as a result of changes in such organizations or their rating
systems, a Fund will attempt to use comparable ratings as standards for
investments in accordance with the investment policies contained in this
Prospectus and in the Statement of Additional Information.
B-5
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
May 6, 1996
VISTA[SM] EUROPEAN FUND
VISTA[SM] GLOBAL FIXED INCOME FUND
VISTA[SM] INTERNATIONAL EQUITY FUND
VISTA[SM] JAPAN FUND
VISTA[SM] SOUTHEAST ASIAN FUND
101 Park Avenue, New York, New York 10178
This Statement of Additional Information sets forth information which may
be of interest to investors but which is not necessarily included in the
Prospectuses offering shares of the Funds. This Statement of Additional
Information should be read in conjunction with the Prospectuses offering shares
of Vista Global Fixed Income Fund, Vista International Equity Fund, Vista
European Fund, Vista Japan Fund and Vista Southeast Asian Fund. Any references
to a "Prospectus" in this Statement of Additional Information is a reference to
one or more of the foregoing Prospectuses, as the context requires. Copies of
each Prospectus may be obtained by an investor without charge by contacting
Vista Fund Distributors, Inc. ("VFD"), the Funds' distributor (the
"Distributor"), at the above-listed address.
This Statement of Additional Information is NOT a prospectus and is
authorized for distribution to prospective investors only if preceded or
accompanied by an effective prospectus.
For more information about your account, simply call or write the
Vista Service Center at:
1-800-34-VISTA
Vista Service Center
P.O. Box 419392
Kansas City, MO 6414
<PAGE>
Table of Contents Page
The Funds................................................................... 3
Investment Policies and Restrictions........................................ 3
Performance Information.....................................................19
Determination of Net Asset Value............................................22
Purchases, Redemptions and Exchanges........................................23
Tax Matters.................................................................24
Management .................................................................31
Independent Accountants.....................................................39
General Information.........................................................39
Appendix A--Description of Certain Obligations Issued or
Guaranteed by U.S. Government Agencies or Instrumentalities................A-1
Appendix B--Description of Ratings..........................................B-1
2
<PAGE>
THE FUNDS
Mutual Fund Group (the "Trust") is an open-end management investment
company which was organized as a business trust under the laws of the
Commonwealth of Massachusetts on May 11, 1987. The Trust presently consists of
16 separate series (the "Funds"). Certain of the Funds are diversified and other
Funds are non-diversified, as such term is defined in the Investment Company Act
of 1940, as amended (the "1940 Act"). The shares of the Funds are collectively
referred to in this Statement of Additional Information as the "Shares."
The Board of Trustees of the Trust provides broad supervision over the
affairs of the Trust including the Funds. The Global Fixed Income Fund and
International Equity Fund each seek to achieve their investment objectives by
investing all of their respective investable assets in an open-end, management
investment company which has the same investment objective as such Fund. The
Global Fixed Income Fund invests in the Global Fixed Income Portfolio and the
International Equity Fund invests in the International Equity Portfolio
(collectively the "Portfolios"). Each of the Portfolios is a New York trust with
its principal office in New York. Certain qualified investors, in addition to a
Fund, may invest in a Portfolio. For purposes of this Statement of Additional
Information, any information or references to either or both of the Portfolios
refer to the operations and activities after implementation of the master
fund/feeder fund structure.
The Board of Trustees of the Trust provides broad supervision over the
affairs of the Trust including the Funds. In the case of the Portfolios,
separate Boards of Trustees, with certain common members, provide broad
supervision. The Chase Manhattan Bank ("Chase") is the investment adviser for
the Funds (other than the Vista Global Fixed Income Fund and Vista International
Equity Fund, which do not have their own advisers) and the two Portfolios. Chase
also serves as the administration of the Trust, including the Funds, and is the
administrator of the Portfolios. A majority of the Trustees of the Trust are not
affiliated with the investment adviser or sub-advisers. Similarly, a majority of
the Trustees of the Portfolios are not affiliated with the investment adviser or
sub-advisers.
INVESTMENT POLICIES AND RESTRICTIONS
Investment Policies
The Prospectuses set forth the various investment policies of each Fund
and Portfolio. The following information supplements and should be read in
conjunction with the realted sections of each Prospectus. For descriptions of
the securities ratings of Moody's Investors Service, Inc. ("Moody's"), Standard
& Poor's Corporation ("S&P") and Fitch Investors Service, Inc. ("Fitch"), see
Appendix B.
U.S. Government Securities. U.S. Government Securities include (1) U.S.
Treasury obligations, which generally differ only in their interest rates,
maturities and times of issuance, including: U.S. Treasury bills (maturities of
one year or less), U.S. Treasury notes (maturities of one to ten years) and U.S.
Treasury bonds (generally maturities of greater than ten years); and (2)
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities which are supported by any of the following: (a) the full
faith and credit of the U.S. Treasury, (b) the right of the issuer to borrow any
amount listed to a specific line of credit from the U.S. Treasury, (c)
discretionary authority of the U.S. Government to purchase certain obligations
of the U.S. Government agency or instrumentality or (d) the credit of the agency
or instrumentality. Agencies and instrumentalities of the U.S. Government
include but are not limited to: Federal Land Banks, Federal Financing Banks,
Banks for Cooperatives, Federal Intermediate Credit Banks, Farm Credit Banks,
Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal
National Mortgage Association, Student Loan Marketing Association, United States
Postal Service, Chrysler Corporate Loan Guarantee Board, Small Business
Administration, Tennessee Valley Authority and any other enterprise established
or sponsored by the U.S. Government. Certain U.S. Government Securities,
including U.S. Treasury bills, notes and bonds, Government National Mortgage
Association certificates and Federal Housing Administration debentures, are
supported by the full faith and credit of the United States. Other U.S.
Government Securities are issued or
3
<PAGE>
guaranteed by federal agencies or government sponsored enterprises and are not
supported by the full faith and credit of the United States. These securities
include obligations that are supported by the right of the issuer to borrow
from the U.S. Treasury, such as obligations of Federal Home Loan Banks, and
obligations that are supported by the creditworthiness of the particular
instrumentality, such as obligations of the Federal National Mortgage
Association or Federal Home Loan Mortgage Corporation. For a description of
certain obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, see Appendix A.
In addition, certain U.S. Government agencies and instrumentalities
issue specialized types of securities, such aa guaranteed notes of the Small
Business Administration, Federal Aviation Administration, Department of Defense,
Bureau of Indian Affairs and Private Export Funding Corporation, which often
provide higher yields that are available from the more common types of
government-backed instruments. However, such specialized instruments may only be
available from a few sources in limited amounts, or only in very large
denominations; they may also require specialized capability in portfolio
servicing and in legal matters related to government guarantees. While they may
frequently offer attractive yields, the limited-activity markets of many of
these securities means that, if a Fund or Portfolio were required to liquidate
any of them, it might not be able to do so advantageously; accordingly, each
Fund and Portfolio investing in such securities normally to hold such securities
to maturity or pursuant to repurchase agreements, and would treat such
securities (including repurchase agreements maturing in more than seven days) as
illiquid for purposes of its limitation on investment in illiquid securities.
Bank Obligations -- Investments in bank obligations are limited to
those of U.S. banks (including their foreign branches) which have total assets
at the time of purchase in excess of $1 billion and the deposits of which are
insured by either the Bank Insurance Fund or the Savings Association Insurance
Fund of the Federal Deposit Insurance Corporation, and foreign banks (including
their U.S. branches) having total assets in excess of $10 billion (or the
equivalent in other currencies), and such other U.S. and foreign commercial
banks which are judged by the advisers to meet comparable credit standing
criteria.
Bank obligations include negotiable certificates of deposit, bankers'
acceptances, fixed time deposits and deposit notes. A certificate of deposit is
a short-term negotiable certificate issued by a commercial bank against funds
deposited in the bank and is either interest-bearing or purchased on a discount
basis. A bankers' acceptance is a short-term draft drawn on a commercial bank by
a borrower, usually in connection with an international commercial transaction.
The borrower is liable for payment as is the bank, which unconditionally
guarantees to pay the draft at its face amount on the maturity date. Fixed time
deposits are obligations of branches of United States banks or foreign banks
which are payable at a stated maturity date and bear a fixed rate of interest.
Although fixed time deposits do not have a market, there are no contractual
restrictions on the right to transfer a beneficial interest in the deposit to a
third party. Fixed time deposits subject to withdrawal penalties and with
respect to which a Fund or Portfolio cannot realize the proceeds thereon within
seven days are deemed "illiquid" for the purposes of its restriction on
investments in illiquid securities. Deposit notes are notes issued by commercial
banks which generally bear fixed rates of interest and typically have original
maturities ranging from eighteen months to five years.
Banks are subject to extensive governmental regulations that may limit
both the amounts and types of loans and other financial commitments that may be
made and the interest rates and fees that may be charged. The profitability of
this industry is largely dependent upon the availability and cost of capital
funds for the purpose of financing lending operations under prevailing money
market conditions. Also, general economic conditions play an important part in
the operations of this industry and exposure to credit losses arising from
possible financial difficulties of borrowers might affect a bank's ability to
meet its obligations. Bank obligations may be general obligations of the parent
bank or may be limited to the issuing branch by the terms of the specific
obligations or by government regulation. Investors should also be aware that
securities of foreign banks and foreign branches of United States banks may
involve foreign investment risks in addition to those relating to domestic bank
obligations.
Depositary Receipts. A Fund or Portfolio will limit its investment in
Depository Receipts not sponsored by the issuer of the underlying security to no
more than 5% of the value of its net assets (at the time of investment). A
purchaser of an unsponsored Depositary Receipt may not have unlimited voting
rights and may not receive as much information about the issuer of the
underlying securities as with a sponsored Depositary Receipt.
Commercial Paper. Commercial paper consists of short-term (usually from
1 to 270 days) unsecured promissory notes issued by corporations in order to
finance their current operations. A variable amount master
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<PAGE>
demand note (which is a type of commercial paper) represents a direct borrowing
arrangement involving periodically fluctuating rates of interest under a letter
agreement between a commercial paper issuer and an institutional lender pursuant
to which the lender may determine to invest varying amounts.
ECU Obligations. The specific amounts of currencies comprising the ECU
may be adjusted by the Council of Ministers of the European Community to reflect
changes in relative values of the underlying currencies. The Trustees do not
believe that such adjustments will adversely affect holders of ECU-denominated
securities or the marketability of such securities.
Supranational Obligations. Supranational organizations include
organizations such as The World Bank, which was chartered to finance development
projects in developing member countries; the European Community, which is a
twelve-nation organization engaged in cooperative economic activities; the
European Coal and Steel Community, which is an economic union of various
European nations steel and coal industries; and the Asian Development Bank,
which is an international development bank established to lend funds, promote
investment and provide technical assistance to member nations of the Asian and
Pacific regions.
Repurchase Agreements. A Fund or Portfolio will enter into repurchase
agreements only with member banks of the Federal Reserve System and securities
dealers believed creditworthy, and only if fully collateralized by securities in
which such Fund or Portfolio is permitted to invest. Under the terms of a
typical repurchase agreement, a Fund or Portfolio would acquire an underlying
instrument for a relatively short period (usually not more than one week)
subject to an obligation of the seller to repurchase the instrument and the Fund
or Portfolio to resell the instrument at a fixed price and time, thereby
determining the yield during the Fund's or Portfolio's holding period. This
procedure results in a fixed rate of return insulated from market fluctuations
during such period. A repurchase agreement is subject to the risk that the
seller may fail to repurchase the security. Repurchase agreements are considered
under the 1940 Act to be loans collateralized by the underlying securities. All
repurchase agreements entered into by a Fund or Portfolio will be fully
collateralized at all times during the period of the agreement in that the value
of the underlying security will be at least equal to the amount of the loan,
including the accrued interest thereon, and the Fund or Portfolio or its
custodian or sub-custodian will have possession of the collateral, which the
Board of Trustees believes will give it a valid, perfected security interest in
the collateral. Whether a repurchase agreement is the purchase and sale of a
security or a collateralized loan has not been conclusively established. This
might become an issue in the event of the bankruptcy of the other party to the
transaction. In the event of default by the seller under a repurchase agreement
construed to be a collateralized loan, the underlying securities would not be
owned by the Fund or Portfolio, but would only constitute collateral for the
seller's obligation to pay the repurchase price. Therefore, a Fund or Portfolio
may suffer time delays and incur costs in connection with the disposition of the
collateral. The Board of Trustees believes that the collateral underlying
repurchase agreements may be more susceptible to claims of the seller's
creditors than would be the case with securities owned by a Fund or Portfolio.
Repurchase agreements maturing in more than seven days are treated as illiquid
for purposes of the Funds' and Portfolios' restrictions on purchases of illiquid
securities. Repurchase agreements are also subject to the risks described below
with respect to stand-by commitments.
Reverse Repurchase Agreements. Reverse Repurchase Agreements involve
the sale of securities held by a Fund or Portfolio with an agreement to
repurchase the securities at an agreed upon price and date. The repurchase price
is generally equal to the original sales price plus interest. Reverse repurchase
agreements are usually for seven days or less and cannot be repaid prior to
their expiration dates. Reverse repurchase agreements involve the risk that the
market value of the portfolio securities transferred may decline below the price
at which the Fund or Portfolio is obliged to purchase the securities.
Forward Commitments. In order to invest a Fund's assets immediately,
while awaiting delivery of securities purchased on a forward commitment basis,
short-term obligations that offer same-day settlement and earnings will normally
be purchased. When a commitment to purchase a security on a forward commitment
basis is made, procedures are established consistent with the General Statement
of Policy of the Securities and Exchange Commission concerning such purchases.
Since that policy currently recommends that an amount of the respective Fund's
or Portfolio's assets equal to the amount of the purchase be held aside or
segregated to be used to pay for the commitment, a separate account of such Fund
or Portfolio consisting of cash, cash equivalents or high quality debt
5
<PAGE>
securities equal to the amount of such Fund's or Portfolio's commitments
securities will be established at such Fund's or Portfolio's custodian bank. For
the purpose of determining the adequacy of the securities in the account, the
deposited securities will be valued at market value. If the market value of such
securities declines, additional cash, cash equivalents or highly liquid
securities will be placed in the account daily so that the value of the account
will equal the amount of such commitments by the respective Fund or Portfolio.
Although it is not intended that such purchases would be made for
speculative purposes, purchases of securities on a forward commitment basis may
involve more risk than other types of purchases. Securities purchased on a
forward commitment basis and the securities held in the respective Fund's or
Portfolio's portfolio are subject to changes in value based upon the public's
perception of the issuer and changes, real or anticipated, in the level of
interest rates. Purchasing securities on a forward commitment basis can involve
the risk that the yields available in the market when the delivery takes place
may actually be higher or lower than those obtained in the transaction itself.
On the settlement date of the forward commitment transaction, the respective
Fund or Portfolio will meet its obligations from then available cash flow, sale
of securities held in the separate account, sale of other securities or,
although it would not normally expect to do so, from sale of the forward
commitment securities themselves (which may have a value greater or lesser than
such Fund's or Portfolio's payment obligations). The sale of securities to meet
such obligations may result in the realization of capital gains or losses.
To the extent a Fund or Portfolio engages in forward commitment
transactions, it will do so for the purpose of acquiring securities consistent
with its investment objective and policies and not for the purpose of investment
leverage, and settlement of such transactions will be within 90 days from the
trade date.
Floating and Variable Rate Securities; Participation Certificates. The
securities in which certain Funds and Portfolios may be invested include
participation certificates issued by a bank, insurance company or other
financial institution in securities owned by such institutions or affiliated
organizations ("Participation Certificates"). A Participation Certificate gives
a Fund or Portfolio an undivided interest in the security in the proportion that
the Fund's or Portfolio's participation interest bears to the total principal
amount of the security and generally provides the demand feature described
below. Each Participation Certificate is backed by an irrevocable letter of
credit or guaranty of a bank (which may be the bank issuing the Participation
Certificate, a bank issuing a confirming letter of credit to that of the issuing
bank, or a bank serving as agent of the issuing bank with respect to the
possible repurchase of the Participation Certificate) or insurance policy of an
insurance company that the Board of Trustees of the Trust has determined meets
the prescribed quality standards for a particular Fund or Portfolio.
A Fund or Portfolio may have the right to sell the Participation
Certificate back to the institution and draw on the letter of credit or
insurance on demand after the prescribed notice period, for all or any part of
the full principal amount of the Fund's or Portfolio's participation interest in
the security, plus accrued interest. The institutions issuing the Participation
Certificates would retain a service and letter of credit fee and a fee for
providing the demand feature, in an amount equal to the excess of the interest
paid on the instruments over the negotiated yield at which the Participation
Certificates were purchased by a Fund or Portfolio. The total fees would
generally range from 5% to 15% of the applicable prime rate or other short-term
rate index. With respect to insurance, a Fund or Portfolio will attempt to have
the issuer of the participation certificate bear the cost of any such insurance,
although the Funds and Portfolios retain the option to purchase insurance if
deemed appropriate.
Obligations that have a demand feature permitting a Fund or Portfolio
to tender the obligation to a foreign bank may involve certain risks associated
with foreign investment. A Fund's or Portfolio's ability to receive payment in
such circumstances under the demand feature from such foreign banks may involve
certain risks such as future political and economic developments, the possible
establishments of laws or restrictions that might adversely affect the payment
of the bank's obligations under the demand feature and the difficulty of
obtaining or enforcing a judgment against the bank.
The advisers have been instructed by the Board of Trustees to monitor
on an ongoing basis the pricing, quality and liquidity of the floating or
variable rate securities held by the Funds and Portfolios, including
Participation Certificates, on the basis of published financial information and
reports of the rating agencies and other bank analytical services to which the
Funds and Portfolios may subscribe. Although these instruments may be sold by a
Fund or Portfolio, it is intended that they be held until maturity.
Past periods of high inflation, together with the fiscal measures
adopted to attempt to deal with it, have seen wide fluctuations in interest
rates, particularly "prime rates" charged by banks. While the value of the
underlying variable rate securities may change with changes in interest rates
generally, the floating or variable rate nature of the underlying floating or
variable rate securities should minimize changes in value of the instruments.
Accordingly, as interest rates decrease
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<PAGE>
or increase, the potential for capital appreciation and the risk of potential
capital depreciation is less than would be the case with a portfolio of fixed
rate securities. A Fund's or Portfolio's portfolio may contain floating or
variable rate securities on which stated minimum or maximum rates, or maximum
rates set by state law, limit the degree to which interest on such floating or
variable rate securities may fluctuate; to the extent it does, increases or
decreases in value may be somewhat greater than would be the case without such
limits. Because the adjustment of interest rates on the floating or variable
rate securities is made in relation to movements of the applicable banks' "prime
rates" or other short-term rate adjustment indices, the floating or variable
rate securities are not comparable to long-term fixed rate securities.
Accordingly, interest rates on the floating or variable rate securities may be
higher or lower than current market rates for fixed rate obligations of
comparable quality with similar maturities.
The maturity of variable rate securities is deemed to be the longer of
(i) the notice period required before a Fund or Portfolio is entitled to receive
payment of the principal amount of the security upon demand or (ii) the period
remaining until the security's next interest rate adjustment.
Zero Coupon, Payment-in-Kind and Stripped Obligations. The principal
and interest components of United States Treasury bonds with remaining
maturities of longer than ten years are eligible to be traded independently
under the Separate Trading of Registered Interest and Principal of Securities
("STRIPS") program. Under the STRIPS program, the principal and interest
components are separately issued by the United States Treasury at the request of
depository financial institutions, which then trade the component parts
separately. The interest component of STRIPS may be more volatile than that of
United States Treasury bills with comparable maturities.
Zero coupon obligations are sold at a substantial discount from their
value at maturity and, when held to maturity, their entire return, which
consists of the amortization of discount, comes from the difference between
their purchase price and maturity value. Because interest on a zero coupon
obligation is not distributed on a current basis, the obligation tends to be
subject to greater price fluctuations in response to changes in interest rates
than are ordinary interest-paying securities with similar maturities. The value
of zero coupon obligations appreciates more than such ordinary interest-paying
securities during periods of declining interest rates and depreciates more than
such ordinary interest-paying securities during periods of rising interest
rates. Under the stripped bond rules of the Internal Revenue Code of 1986, as
amended, investments by a Fund or Portfolio in zero coupon obligations will
result in the accrual of interest income on such investments in advance of the
receipt of the cash corresponding to such income.
Zero coupon securities may be created when a dealer deposits a U.S.
Treasury or federal agency security with a custodian and then sells the coupon
payments and principal payment that will be generated by this security
separately. Proprietary receipts, such as Certificates of Accrual on Treasury
Securities, Treasury Investment Growth Receipts and generic Treasury Receipts,
are examples of stripped U.S. Treasury securities separated into their component
parts through such custodial arrangements.
Payment-in-kind ("PIK") bonds are debt obligations which provide that
the issuer thereof may, at its option, pay interest on such bonds in cash or in
the form of additional debt obligations. Such investments benefit the issuer by
mitigating its need for cash to meet debt service, but also require a higher
rate of return to attract investors who are willing to defer receipt of such
cash. Such investments experience greater volatility in market value due to
changes in interest rates than debt obligations which provide for regular
payments of interest. A Fund or Portfolio will accrue income on such investments
for tax and accounting purposes, as required, which is distributable to
shareholders and which, because no cash is received at the time of accrual, may
require the liquidation of other portfolio securities to satisfy the Fund's or
Portfolio's distribution obligations.
Warrants and Rights. Warrants basically are options to purchase equity
securities at a specified price for a specific period of time. Their prices do
not necessarily move parallel to the prices of the underlying securities. Rights
are similar to warrants but normally have a shorter duration and are distributed
directly by the issuer to shareholders. Rights and warrants have no voting
rights, receive no dividends and have no rights with respect to the assets of
the issuer.
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Illiquid Securities. For purposes of its limitation on investments in
illiquid securities, each Fund and Portfolio may elect to treat as liquid, in
accordance with procedures established by the Board of Trustees, certain
investments in restricted securities for which there may be a secondary market
of qualified institutional buyers as contemplated by Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act") and commercial
obligations issued in reliance on the so-called "private placement" exemption
from registration afforded by Section 4(2) of the Securities Act. ("Section 4(2)
paper") Rule 144A provides an exemption from the registration requirements of
the Securities Act for the resale of certain restricted securities to qualified
institutional buyers. Section 4(2) paper is restricted as to disposition under
the federal securities laws, and generally is sold to institutional investors
such as a Fund or Portfolio who agree that they are purchasing the paper for
investment and not with a view to public distribution. Any resale of Section
4(2) paper by the purchaser must be in an exempt transaction.
One effect of Rule 144A and Section 4(2) is that certain restricted
securities may now be liquid, though there is no assurance that a liquid market
for Rule 144A securities or Section 4(2) paper will develop or be maintained.
The Trustees have adopted policies and procedures for the purpose of determining
whether securities that are eligible for resale under Rule 144A and Section 4(2)
paper are liquid or illiquid for purposes of the limitation on investment in
illiquid securities. Pursuant to those policies and procedures, the Trustees
have delegated to the advisers the determination as to whether a particular
instrument is liquid or illiquid, requiring that consideration be given to,
among other things, the frequency of trades and quotes for the security, the
number of dealers willing to sell and security and the number of potential
purchasers, dealer undertakings to make a market in the security, the nature of
the security and the time needed to dispose of the security. The Trustees will
periodically review the Funds' and Portfolios' purchases and sales of Rule 144A
securities and Section 4(2) paper.
Stand-By Commitments. In a put transaction, a Fund or Portfolio
acquires the right to sell a security at an agreed upon price within a specified
period prior to its maturity date, and a stand-by commitment entitles a Fund or
Portfolio to same-day settlement and to receive an exercise price equal to the
amortized cost of the underlying security plus accrued interest, if any, at the
time of exercise. Stand-by commitments are subject to certain risks, which
include the inability of the issuer of the commitment to pay for the securities
at the time the commitment is exercised, the fact that the commitment is not
marketable by a Fund or Portfolio, and that the maturity of the underlying
security will generally be different from that of the commitment.
Securities Loans. To the extent specified in its Prospectus, each Fund
and Portfolio is permitted to lend its securities to broker-dealers and other
institutional investors in order to generate additional income. Such loans of
portfolio securities may not exceed 30% of the value of a Fund's or Portfolio's
total assets. In connection with such loans, a Fund or Portfolio will receive
collateral consisting of cash, cash equivalents, U.S. Government securities or
irrevocable letters of credit issued by financial institutions. Such collateral
will be maintained at all times in an amount equal to at least 102% of the
current market value plus accrued interest of the securities loaned. A Fund or
Portfolio can increase its income through the investment of such collateral. A
Fund or Portfolio continues to be entitled to the interest payable or any
dividend-equivalent payments received on a loaned security and, in addition, to
receive interest on the amount of the loan. However, the receipt of any
dividend-equivalent payments by a Fund or Portfolio on a loaned security from
the borrower will not qualify for the dividends-received deduction. Such loans
will be terminable at any time upon specified notice. A Fund or Portfolio might
experience risk of loss if the institutions with which it has engaged in
portfolio loan transactions breach their agreements with such Fund or Portfolio.
The risks in lending portfolio securities, as with other extensions of secured
credit, consist of possible delays in receiving additional collateral or in the
recovery of the securities or possible loss of rights in the collateral should
the borrower experience financial difficulty. Loans will be made only to firms
deemed by the advisers to be of good standing and will not be made unless, in
the judgment of the advisers, the consideration to be earned from such loans
justifies the risk.
Additional Policies Regarding Derivative and Related Transactions
Introduction. As explained more fully below, the Funds and Portfolios
may employ derivative and related instruments as tools in the management of
portfolio assets. Put briefly, a "derivative" instrument may be considered a
security or other instrument which derives its value from the value or
performance of other instruments or assets, interest or currency exchange rates,
or indexes. For instance, derivatives include futures, options, forward
contracts, structured notes and various over-the-counter instruments.
Like other investment tools or techniques, the impact of using
derivatives strategies or similar instruments depends to a great extent on how
they are used. Derivatives are generally used by portfolio managers in three
ways: First, to reduce risk by hedging (offsetting) an investment position.
Second, to substitute for another security particularly where it is quicker,
easier and less expensive to invest in derivatives. Lastly, to speculate or
enhance portfolio performance. When used prudently, derivatives can offer
several benefits, including easier and more effective hedging, lower transaction
costs, quicker investment and more profitable use of portfolio assets. However,
derivatives also have the potential to significantly magnify risks, thereby
leading to potentially greater losses for a Fund or Portfolio.
Each Fund and Portfolio may invest its assets in derivative and related
instruments subject only to the Fund's or Portfolio's investment objective and
policies and the requirement that the Fund or Portfolio maintain
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segregated accounts consisting of liquid assets, such as cash, U.S. Government
securities, or other high-grade debt obligations (or, as permitted by applicable
regulation, enter into certain offsetting positions) to cover its obligations
under such instruments with respect to positions where there is no underlying
portfolio asset so as to avoid leveraging the Fund or Portfolio.
The value of some derivative or similar instruments in which the Funds
and Portfolios may invest may be particularly sensitive to changes in prevailing
interest rates or other economic factors, and--like other investments of the
Funds and Portfolios--the ability of a Fund or Portfolio to successfully utilize
these instruments may depend in part upon the ability of the advisers to
forecast interest rates and other economic factors correctly. If the advisers
inaccurately forecasts such factors and has taken positions in derivative or
similar instruments contrary to prevailing market trends, the Funds and
Portfolios could be exposed to the risk of a loss. The Funds and/or Portfolios
may not employ any or all of the strategies described herein, and no assurance
can be given that any strategy used will succeed.
Set forth below is an explanation of the various derivatives strategies
and related instruments the Funds and Portfolios may employ along with risks or
special attributes associated with them. This discussion is intended to
supplement the Funds' current prospectuses as well as provide useful information
to prospective investors.
Risk Factors
As explained more fully below and in the discussions of particular
strategies or instruments, there are a number of risks associated with the use
of derivatives and related instruments: There can be no guarantee that there
will be a correlation between price movements in a hedging vehicle and in the
portfolio assets being hedged. An incorrect correlation could result in a loss
on both the hedged assets in a Fund or Portfolio and the hedging vehicle so that
the portfolio return might have been greater had hedging not been attempted.
This risk is particularly acute in the case of "cross-hedges" between
currencies. The advisers may inaccurately forecast interest rates, market values
or other economic factors in utilizing a derivatives strategy. In such a case, a
Fund or Portfolio may have been in a better position had it not entered into
such strategy. Hedging strategies, while reducing risk of loss, can also reduce
the opportunity for gain. In other words, hedging usually limits both potential
losses as well as potential gains. Strategies not involving hedging may increase
the risk to a Fund or Portfolio. Certain strategies, such as yield enhancement,
can have speculative characteristics and may result in more risk to a Fund or
Portfolio than hedging strategies using the same instruments.
There can be no assurance that a liquid market will exist at a time
when a Fund or Portfolio seeks to close out an option, futures contract or other
derivative or related position. Many exchanges and boards of trade limit the
amount of fluctuation permitted in option or futures contract prices during a
single day; once the daily limit has been reached on particular contract, no
trades may be made that day at a price beyond that limit. In addition, certain
instruments are relatively new and without a significant trading history. As a
result, there is no assurance that an active secondary market will develop or
continue to exist. Finally, over-the-counter instruments typically do not have a
liquid market. Lack of a liquid market for any reason may prevent a Fund or
Portfolio from liquidating an unfavorable position. Activities of large traders
in the futures and securities markets involving arbitrage, "program trading,"
and other investment strategies may cause price distortions in these markets. In
certain instances, particularly those involving over-the-counter transactions,
forward contracts, foreign exchanges or foreign boards of trade, there is a
greater potential that a counterparty or broker may default or be unable to
perform on its commitments. In the event of such a default, a Fund or Portfolio
may experience a loss. In transactions involving currencies, the value of the
currency underlying an instrument may fluctuate due to many factors, including
economic conditions, interest rates, governmental policies and market forces.
Specific Uses and Strategies
Set forth below are explanations of various strategies involving
derivatives and related instruments which may be used by a Fund or Portfolio.
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Options on Securities, Securities Indexes, Currencies and Debt
Instruments. A Fund or Portfolio may PURCHASE, SELL or EXERCISE call and put
options on: securities; securities indexes; currencies; or debt instruments.
Although in most cases these options will be exchange-traded, the Funds
and Portfolios may also purchase, sell or exercise over-the-counter options.
Over-the-counter options differ from exchange-traded options in that they are
two-party contracts with price and other terms negotiated between buyer and
seller. As such, over-the-counter options generally have much less market
liquidity and carry the risk of default or nonperformance by the other party.
One purpose of purchasing put options is to protect holdings in an
underlying or related security against a substantial decline in market value.
One purpose of purchasing call options is to protect against substantial
increases in prices of securities a Fund or Portfolio intends to purchase
pending its ability to invest in such securities in an orderly manner. A Fund or
Portfolio may also use combinations of options to minimize costs, gain exposure
to markets or take advantage of price disparities or market movements. For
example, a Fund or Portfolio may sell put or call options it has previously
purchased or purchase put or call options it has previously sold. These
transactions may result in a net gain or loss depending on whether the amount
realized on the sale is more or less than the premium and other transaction
costs paid on the put or call option which is sold. A Fund or Portfolio may
write a call or put option in order to earn the related premium from such
transactions. Prior to exercise or expiration, an option may be closed out by an
offsetting purchase or sale of a similar option. The Funds will not write
uncovered options.
In addition to the general risk factors noted above, the purchase and
writing of options involve certain special risks. During the option period, a
Fund or Portfolio writing a covered call (i.e., where the underlying securities
are held by the Fund or Portfolio) has, in return for the premium on the option,
given up the opportunity to profit from a price increase in the underlying
securities above the exercise price, but has retained the risk of loss should
the price of the underlying securities decline. The writer of an option has no
control over the time when it may be required to fulfill its obligation as a
writer of the option. Once an option writer has received an exercise notice, it
cannot effect a closing purchase transaction in order to terminate its
obligation under the option and must deliver the underlying securities at the
exercise price.
If a put or call option purchased by a Fund or Portfolio is not sold
when it has remaining value, and if the market price of the underlying security,
in the case of a put, remains equal to or greater than the exercise price or, in
the case of a call, remains less than or equal to the exercise price, such Fund
or Portfolio will lose its entire investment in the option. Also, where a put or
call option on a particular security is purchased to hedge against price
movements in a related security, the price of the put or call option may move
more or less than the price of the related security. There can be no assurance
that a liquid market will exist when a Fund or Portfolio seeks to close out an
option position. Furthermore, if trading restrictions or suspensions are imposed
on the options markets, a Fund or Portfolio may be unable to close out a
position.
Futures Contracts and Options on Futures Contracts. A Fund on Portfolio
may purchase or sell: interest-rate futures contracts; stock index futures
contracts; foreign currency futures contracts; futures contracts on specified
instruments or indices; and options on these futures contracts ("futures
options").
The futures contracts and futures options may be based on various
instruments or indices in which the Funds and Portfolios may invest such as
foreign currencies, certificates of deposit, Eurodollar time deposits,
securities indices, economic indices (such as the Consumer Price Indices
compiled by the U.S. Department of Labor).
Futures contracts and futures options may be used to hedge portfolio
positions and transactions as well as to gain exposure to markets. For example,
a Fund or Portfolio may sell a futures contract--or buy a futures option--to
protect against a decline in value, or reduce the duration, of portfolio
holdings. Likewise, these instruments may be used where a Fund or Portfolio
intends to acquire an instrument or enter into a position. For example, a Fund
or Portfolio may purchase a futures contract--or buy a futures option--to gain
immediate exposure in a market or otherwise offset increases in the purchase
price of securities or currencies to be acquired in the future. Futures options
may also be written to earn the related premiums.
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When writing or purchasing options, the Funds and Portfolios may
simultaneously enter into other transactions involving futures contracts or
futures options in order to minimize costs, gain exposure to markets, or take
advantage of price disparities or market movements. Such strategies may entail
additional risks in certain instances. The Funds and Portfolios may engage in
cross-hedging by purchasing or selling futures or options on a security or
currency different from the security or currency position being hedged to take
advantage of relationships between the two securities or currencies.
Investments in futures contracts and options thereon involve risks
similar to those associated with options transactions discussed above. The Funds
and Portfolios will only enter into futures contracts or options or futures
contracts which are traded on a U.S. or foreign exchange or board of trade, or
similar entity, or quoted on an automated quotation system.
Forward Contracts. A Fund or Portfolio may use foreign currency and
interest-rate forward contracts for various purposes as described below.
Foreign currency exchange rates may fluctuate significantly over short
periods of time. They generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of investments in
different countries, actual or perceived changes in interest rates and other
complex factors, as seen from an international perspective. The Funds and
Portfolios may invest in securities denominated in foreign currencies and may,
in addition to buying and selling foreign currency futures contracts and options
on foreign currencies and foreign currency futures, enter into forward foreign
currency exchange contracts to reduce the risks or otherwise take a position in
anticipation of changes in foreign exchange rates. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be a fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
By entering into a forward foreign currency contract, a Fund or Portfolio "locks
in" the exchange rate between the currency it will deliver and the currency it
will receive for the duration of the contract. As a result, a Fund or Portfolio
reduces its exposure to changes in the value of the currency it will deliver and
increases its exposure to changes in the value of the currency it will exchange
into. The effect on the value of a Fund or Portfolio is similar to selling
securities denominated in one currency and purchasing securities denominated in
another. Transactions that use two foreign currencies are sometimes referred to
as "cross-hedges."
A Fund or Portfolio may enter into these contracts for the purpose of
hedging against foreign exchange risk arising from investments or anticipated
investments in securities denominated in foreign currencies. A Fund or Portfolio
may also enter into these contracts for purposes of increasing exposure to a
foreign currency or to shift exposure to foreign currency fluctuations from one
country to another.
A Fund or Portfolio may also use forward contracts to hedge against
changes in interest-rates, increase exposure to a market or otherwise take
advantage of such changes. An interest-rate forward contract involves the
obligation to purchase or sell a specific debt instrument at a fixed price at a
future date.
Interest Rate and Currency Transactions. A Fund or Portfolio may employ
currency and interest rate management techniques, including transactions in
options (including yield curve options), futures, options on futures, forward
foreign currency exchange contracts, currency options and futures and currency
and interest rate swaps. The aggregate amount of a Fund's or Portfolio's net
currency exposure will not exceed the total net asset value of its portfolio.
However, to the extent that a Fund or Portfolio is fully invested while also
maintaining currency positions, it may be exposed to greater combined risk.
The Funds and Portfolios will only enter into interest rate and
currency swaps on a net basis, i.e., the two payment streams are netted out,
with the Fund or Portfolio receiving or paying, as the case may be, only the net
amount of the two payments. Interest rate and currency swaps do not involve the
delivery of securities, the underlying currency, other underlying assets or
principal. Accordingly, the risk of loss with respect to interest rate and
currency swaps is limited to the net amount of interest or currency payments
that a Fund or Portfolio is contractually obligated to make. If the other party
to an interest rate or currency swap defaults, a Fund's or Portfolio's risk of
loss consists of the net amount of interest or currency payments that the Fund
or Portfolio is
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contractually entitled to receive. Since interest rate and currency swaps are
individually negotiated, the Funds and Portfolios expect to achieve an
acceptable degree of correlation between their portfolio investments and their
interest rate or currency swap positions.
A Fund or Portfolio may hold foreign currency received in connection
with investments in foreign securities when it would be beneficial to convert
such currency into U.S. dollars at a later date, based on anticipated changes in
the relevant exchange rate.
A Funds or Portfolio may purchase or sell without limitation as to a
percentage of its assets forward foreign currency exchange contracts when the
advisers anticipate that the foreign currency will appreciate or depreciate in
value, but securities denominated in that currency do not present attractive
investment opportunities and are not held by such Fund or Portfolio. In
addition, a Fund or Portfolio may enter into forward foreign currency exchange
contracts in order to protect against adverse changes in future foreign currency
exchange rates. A Fund or Portfolio may engage in cross-hedging by using forward
contracts in one currency to hedge against fluctuations in the value of
securities denominated in a different currency if its advisers believe that
there is a pattern of correlation between the two currencies. Forward contracts
may reduce the potential gain from a positive change in the relationship between
the U.S. Dollar and foreign currencies. Unanticipated changes in currency prices
may result in poorer overall performance for a Fund or Portfolio than if it had
not entered into such contracts. The use of foreign currency forward contracts
will not eliminate fluctuations in the underlying U.S. dollar equivalent value
of the prices of or rates of return on a Fund's or Portfolio's foreign currency
denominated portfolio securities and the use of such techniques will subject the
Fund or Portfolio to certain risks.
The matching of the increase in value of a forward contract and the
decline in the U.S. dollar equivalent value of the foreign currency denominated
asset that is the subject of the hedge generally will not be precise. In
addition, a Fund or Portfolio may not always be able to enter into foreign
currency forward contracts at attractive prices, and this will limit a Fund's or
Portfolio's ability to use such contract to hedge or cross-hedge its assets.
Also, with regard to a Fund's or Portfolio's use of cross-hedges, there can be
no assurance that historical correlations between the movement of certain
foreign currencies relative to the U.S. dollar will continue. Thus, at any time
poor correlation may exist between movements in the exchange rates of the
foreign currencies underlying a Fund's or Portfolio's cross-hedges and the
movements in the exchange rates of the foreign currencies in which the Fund's or
Portfolio's assets that are the subject of such cross-hedges are denominated.
A Fund or Portfolio may enter into interest rate and currency swaps to
the maximum allowed limits under applicable law. A Fund or Portfolio will
typically use interest rate swaps to shorten the effective duration of its
portfolio. Interest rate swaps involve the exchange by a Fund or Portfolio with
another party of their respective commitments to pay or receive interest, such
as an exchange of fixed rate payments for floating rate payments. Currency swaps
involve the exchange of their respective rights to make or receive payments in
specified currencies.
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Mortgage-Related Securities. A Fund or Portfolio may purchase
mortgage-backed securities--i.e., securities representing an ownership interest
in a pool of mortgage loans issued by lenders such as mortgage bankers,
commercial banks and savings and loan associations. Mortgage loans included in
the pool--but not the security itself-may be insured by the Government National
Mortgage Association or the Federal Housing Administration or guaranteed by the
Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation or the Veterans Administration. Mortgage-backed securities provide
investors with payments consisting of both interest and principal as the
mortgages in the underlying mortgage pools are paid off. Although providing the
potential for enhanced returns, mortgage-backed securities can also be volatile
and result in unanticipated losses.
The average life of a mortgage-backed security is likely to be
substantially less than the original maturity of the mortgage pools underlying
the securities. Prepayments of principal by mortgagors and mortgage foreclosures
will usually result in the return of the greater part of the principal invested
far in advance of the maturity of the mortgages in the pool. The actual rate of
return of a mortgage-backed security may be adversely affected by the prepayment
of mortgages included in the mortgage pool underlying the security.
A Fund or Portfolio may also invest in securities representing
interests in collateralized mortgage obligations ("CMOs"), real estate mortgage
investment conduits ("REMICs") and in pools of certain other asset-backed bonds
and mortgage pass-through securities. Like a bond, interest and prepaid
principal are paid, in most cases, monthly. CMOs may be collateralized by whole
mortgage loans but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by the U.S. Government, or U.S.
Government-related entities, and their income streams.
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CMOs are structured into multiple classes, each bearing a different
stated maturity. Actual maturity and average life will depend upon the
prepayment experience of the collateral. Monthly payment of principal received
from the pool of underlying mortgages, including prepayments, are allocated to
different classes in accordance with the terms of the instruments, and changes
in prepayment rates or assumptions may significantly affect the expected average
life and value of a particular class.
REMICs include governmental and/or private entities that issue a fixed
pool of mortgages secured by an interest in real property. REMICs are similar to
CMOs in that they issue multiple classes of securities. REMICs issued by private
entities are not U.S. Government securities and are not directly guaranteed by
any government agency. They are secured by the underlying collateral of the
private issuer.
The advisers expect that governmental, government-related or private
entities may create mortgage loan pools and other mortgage-related securities
offering mortgage pass-through and mortgage-collateralized investments in
addition to those described above. The mortgages underlying these securities may
include alternative mortgage instruments, that is, mortgage instruments whose
principal or interest payments may vary or whose terms to maturity may differ
from customary long-term fixed-rate mortgages. A Fund or Portfolio may also
invest in debentures and other securities of real estate investment trusts. As
new types of mortgage-related securities are developed and offered to investors,
the Funds and Portfolios may consider making investments in such new types of
mortgage-related securities.
Asset-Backed Securities. A Fund or Portfolio may invest in asset-backed
securities, including conditional sales contracts, equipment lease certificates
and equipment trust certificates. The advisers expect that other asset-backed
securities (unrelated to mortgage loans) will be offered to investors in the
future. Several types of asset-backed securities already exist, including, for
example, "Certificates for Automobile Receivables[SM]" or "CARS[SM]" ("CARS").
CARS represent undivided fractional interests in a trust whose assets consist of
a pool of motor vehicle retail installment sales contracts and security
interests in the vehicles securing the contracts. Payments of principal and
interest on CARS are passed-through monthly to certificate holders, and are
guaranteed up to certain amounts and for a certain time period by a letter of
credit issued by a financial institution unaffiliated with the trustee or
originator of the CARS trust. An investor's return on CARS may be affected by
early prepayment of principal on the underlying vehicle sales contracts. If the
letter of credit is exhausted, the CARS trust may be prevented from realizing
the full amount due on a sales contract because of state law requirements and
restrictions relating to foreclosure sales of vehicles and the obtaining of
deficiency judgments following such sales or because of depreciation, damage or
loss of a vehicle, the application of federal and state bankruptcy and
insolvency laws, the failure of servicers to take appropriate steps to perfect
the CARS trust's rights in the underlying loans and the servicer's sale of such
loans to bona fide purchasers, giving rise to interests in such loans superior
to those of the CARS trust, or other factors. As a result, certificate holders
may experience delays in payments or losses if the letter of credit is
exhausted. A Fund or Portfolio also may invest in other types of asset-backed
securities. In the selection of other asset-backed securities, the advisers will
attempt to assess the liquidity of the security giving consideration to the
nature of the security, the frequency of trading in the security, the number of
dealers making a market in the security and the overall nature of the
marketplace for the security.
Structured Products. A Fund or Portfolio may invest in interests in
entities organized and operated solely for the purpose of restructuring the
investment characteristics of certain other investments. This type of
restructuring involves the deposit with or purchase by an entity, such as a
corporation or trust, or specified instruments (such as commercial bank loans)
and the issuance by that entity of one or more classes of securities
("structured products") backed by, or representing interests in, the underlying
instruments. The cash flow on the underlying instruments may be apportioned
among the newly issued structured products to create securities with different
investment characteristics such as varying maturities, payment priorities and
interest rate provisions, and the extent of the payments made with respect to
structured products is dependent on the extent of the cash flow on the
underlying instruments. A Fund or Portfolio may invest in structured products
which represent derived investment positions based on relationships among
different markets or asset classes.
A Fund or Portfolio may also invest in other types of structured
products, including, among others, inverse floaters, spread trades and notes
linked by a formula to the price of an underlying instrument. Inverse floaters
have coupon rates that vary inversely at a multiple of a designated floating
rate (which typically is determined by reference to an index rate, but may also
be determined through a dutch auction or a remarketing agent or by reference to
another security) (the "reference rate"). As an example, inverse floaters may
constitute a class of CMOs with a coupon rate that moves inversely to a
designated index, such as LIBOR (London Interbank Offered Rate) or the Cost of
Funds Index. Any rise in the reference rate of an inverse floater (as a
consequence of an increase in interest rates) causes a drop in the coupon rate
while any drop in the reference rate of an inverse floater causes an increase in
the coupon rate. A spread trade is an investment position relating to a
difference in the prices or interest rates of two securities where the value of
the investment position is determined by movements in the difference between the
prices or interest rates, as the case may be, of the respective securities. When
a Fund or Portfolio invests in notes linked to the price of an underlying
instrument, the price of the underlying security is determined by a multiple
(based on a formula) of the price of such underlying security. A structured
product may be considered to be leveraged to the extent its interest rate varies
by a magnitude that exceeds the magnitude of the change in the index rate of
interest. Because they are linked to their underlying markets or securities,
investments in structured products generally are subject to greater volatility
than an investment directly in the underlying market or security. Total return
on the structured product is derived by linking return to one or more
characteristics of the underlying instrument. Because certain structured
products of the type in which a Fund or Portfolio may invest may involve no
credit enhancement, the credit risk of those structured products generally would
be equivalent to that of the underlying instruments. A Fund or Portfolio may
invest in a class of structured products that is either subordinated or
unsubordinated to the right of payment of another class. Subordinated structured
products typically have higher yields and present greater risks than
unsubordinated structured products. Although a Fund's or Portfolio's purchase of
subordinated structured products would have similar economic effect to that of
borrowing against the underlying securities, the purchase will not be deemed to
be leverage for purposes of a Fund's or Portfolio's fundamental investment
limitation related to borrowing and leverage.
Certain issuers of structured products may be deemed to be "investment
companies" as defined in the 1940 Act. As a result, an investment in these
structured products may be limited by the restrictions contained in the 1940
Act. Structured products are typically sold in private placement transactions,
and there currently is no active trading market for structured products. As a
result, certain structured products in which a Fund or Portfolio invests may be
deemed illiquid and subject to its limitation on illiquid investments.
Investments in structured products generally are subject to greater
volatility than an investment directly in the underlying market or security. In
addition, because structured products are typically sold in private placement
transactions, there currently is no active trading market for structured
products.
Additional Restrictions on the Use of Futures and Option Contracts
None of the Funds is a "commodity pool" (i.e., a pooled investment vehicle
which trades in commodity futures contracts and options thereon and the operator
of which is registered with the CFTC and futures contracts and futures options
will be purchased, sold or entered into only for bona fide hedging purposes,
provided that a Fund may enter into such transactions for purposes other than
bona fide hedging if, immediately thereafter, the sum of the amount of its
initial margin and premiums on open contracts and options would not exceed 5% of
the liquidation value of the Fund's portfolio, provided, further, that, in the
case of an option that is in-the-money, the in-the-money amount may be excluded
in calculating the 5% limitation.
14
<PAGE>
When a Fund or Portfolio purchases a futures contract, an amount of
cash or cash equivalents or high quality debt securities will be deposited in a
segregated account with such Fund's or Portfolio's custodian or sub-custodian so
that the amount so segregated, plus the initial deposit and variation margin
held in the account of its broker, will at all times equal the value of the
futures contract, thereby insuring that the use of such futures is unleveraged.
A Fund's or Portfolio's ability to engage in the transactions described
herein may be limited by the current federal income tax requirement that a Fund
or Portfolio derive less than 30% of its gross income from the sale or other
disposition of stock or securities held for less than three months.
Investment Restrictions
The Funds and Portfolios have adopted the following investment
restrictions which may not be changed without approval by a "majority of the
outstanding shares" of a Fund or Portfolio which, as used in this Statement of
Additional Information, means the vote of the lesser of (i) 67% or more of the
shares of a Fund or total beneficial interests of a Portfolio present at a
meeting, if the holders of more than 50% of the outstanding shares of a Fund or
total beneficial interests of a Portfolio are present or represented by proxy,
or (ii) more than 50% of the outstanding shares of a Fund or total beneficial
interests of a Portfolio.
Whenever the Trust is requested to vote on a fundamental policy of a
Portfolio, the Trust will hold a meeting of shareholders of the Fund that
invests in such Portfolio and will cast its votes as instructed by the
shareholders of such Fund.
With respect to the Global Fixed Income Fund and the International
Equity Fund, it is a fundamental policy of each Fund that when the Fund holds no
portfolio securities except interests in the Portfolio in which it invests, the
Fund's investment objective and policies shall be identical to the Portfolio's
investment objective and policies, except for the following: the Fund (1) may
invest more than 5% of its assets in another issuer, (2) may, consistent with
Section 12 of the 1940 Act, invest in securities issued by other registered
investment companies, (3) may invest more than 10% of its net assets in the
securities of a registered investment company, (4) may hold more than 10% of the
voting securities of a registered investment company, (5) will concentrate its
investments in the investment company and (6) will not issue any senior security
(as defined in the 1940 Act), except that (a) a Fund may engage in transactions
that may result in the issuance of senior securities to the extent permitted
under applicable regulations and interpretations of the 1940 Act or an exemptive
order; (b) a Fund may acquire other securities, the acquisition of which may
result in the issuance of a senior security, to the extent permitted under
applicable regulations or interpretations of the 1940 Act; and (c) subject to
the restrictions set forth below, a Fund may borrow money as authorized by the
1940 Act. For purposes of this restriction, collateral arrangements with respect
to permissible options and futures transactions, including deposits of initial
and variation margin, are not considered to be the issuance of a senior
security. It is a fundamental investment policy of each Fund that when the Fund
holds only portfolio securities other than interests in the Portfolio, the
Fund's investment objective and policies shall be identical to the investment
objective and policies of the Portfolio at the time the assets of the Fund were
withdrawn from the Portfolio.
Each Fund and Portfolio may not:
(1) borrow money, except that each Fund and Portfolio may borrow money
for temporary or emergency purposes, or by engaging in reverse
repurchase transactions, in an amount not exceeding 33-1/3% of the
value of its total assets at the time when the loan is made and may
pledge, mortgage or hypothecate no more than 1/3 of its net assets to
secure such borrowings. Any borrowings representing more than 5% of
total assets must be repaid before the Fund or Portfolio may make
additional investments;
(2) make loans, except that each Fund and Portfolio may: (i) purchase
and hold debt instruments (including without limitation, bonds, notes,
debentures or other obligations and certificates of deposit, bankers'
15
<PAGE>
acceptances and fixed time deposits) in accordance with its investment
objectives and policies; (ii) enter into repurchase agreements with
respect to portfolio securities; and (iii) lend portfolio securities
with a value not in excess of one-third of the value of its total
assets;
(3) purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or repurchase agreements secured thereby) if, as a
result, more than 25% of the Fund's or Portfolio's total assets would
be invested in the securities of companies whose principal business
activities are in the same industry. Notwithstanding the foregoing,
with respect to a Fund's or Portfolio's permissible futures and options
transactions in U.S. Government securities, positions in such options
and futures shall not be subject to this restriction;
(4) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments but this shall not
prevent a Fund or Portfolio from (i) purchasing or selling options and
futures contracts or from investing in securities or other instruments
backed by physical commodities or (ii) engaging in forward purchases or
sales of foreign currencies or securities;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent a Fund or Portfolio from investing in securities or other
instruments backed by real estate or securities of companies engaged in
the real estate business). Investments by a Fund or Portfolio in
securities backed by mortgages on real estate or in marketable
securities of companies engaged in such activities are not hereby
precluded;
(6) issue any senior security (as defined in the 1940 Act), except that
(a) a Fund or Portfolio may engage in transactions that may result in
the issuance of senior securities to the extent permitted under
applicable regulations and interpretations of the 1940 Act or an
exemptive order; (b) a Fund or Portfolio may acquire other securities,
the acquisition of which may result in the issuance of a senior
security, to the extent permitted under applicable regulations or
interpretations of the 1940 Act; and (c) subject to the restrictions
set forth above, a Fund or Portfolio may borrow money as authorized by
the 1940 Act. For purposes of this restriction, collateral arrangements
with respect to permissible options and futures transactions, including
deposits of initial and variation margin, are not considered to be the
issuance of a senior security; or
(7) underwrite securities issued by other persons except insofar as a
Fund or Portfolio may technically be deemed to be an underwriter under
the Securities Act of 1933 in selling a portfolio security.
In addition, as a matter of fundamental policy, notwithstanding any
other investment policy or restriction, each Fund may seek to achieve its
investment objective by investing all of its investable assets in another
investment company having substantially the same investment objective and
policies as the Fund. For purposes of investment restriction (5) above, real
estate includes Real Estate Limited Partnerships. For purposes of investment
restriction (3) above, industrial development bonds, where the payment of
principal and interest is the ultimate responsibility of companies within the
same industry, are grouped together as an "industry." Supranational
organizations are collectively considered to be members of a single "industry"
for purposes of restriction (3) above.
In addition, each Fund and Portfolio is subject to the following
nonfundamental restrictions which may be changed without shareholder approval:
(1) Each Fund and Portfolio may not, with respect to 50% of its assets,
hold more than 10% of the outstanding voting securities of an issuer.
(2) Each Fund and Portfolio may not make short sales of securities,
other than short sales "against the box," or purchase securities on
margin except for short-term credits necessary for clearance of
portfolio transactions, provided that this restriction will not be
applied to limit the use of options, futures contracts and related
options, in the manner otherwise permitted by the investment
restrictions, policies and investment program of a Fund or Portfolio.
(3) Each Fund and Portfolio may not purchase or sell interests in oil,
gas or mineral leases.
(4) Each Fund and Portfolio may not invest more than 15% of its net
assets in illiquid securities.
16
<PAGE>
(5) Each Fund and Portfolio may not write, purchase or sell any put or
call option or any combination thereof, provided that this shall not
prevent (i) the writing, purchasing or selling of puts, calls or
combinations thereof with respect to portfolio securities or (ii) with
respect to a Fund's or Portfolio's permissible futures and options
transactions, the writing, purchasing, ownership, holding or selling of
futures and options positions or of puts, calls or combinations thereof
with respect to futures.
(6) Each Fund and Portfolio may invest up to 5% of its total assets in
the securities of any one investment company, but may not own more than
3% of the securities of any one investment company or invest more than
10% of its total assets in the securities of other investment
companies.
It is the Trust's position that proprietary strips, such as CATS and
TIGRS, are United States Government securities. However, the Trust has been
advised that the staff of the Securities and Exchange Commission's Division of
Investment Management does not consider these to be United States Government
securities, as defined under the Investment Company Act of 1940, as amended.
For purposes of the Funds' and Portfolios' investment restrictions, the
issuer of a tax-exempt security is deemed to be the entity (public or private)
ultimately responsible for the payment of the principal of and interest on the
security.
In order to permit the sale of its shares in certain states, a Fund or
Portfolio may make commitments more restrictive than the investment policies and
limitations described above and in its Prospectus. Should a Fund or Portfolio
determine that any such commitment is no longer in its best interests, it will
revoke the commitment by terminating sales of its shares in the state involved.
In order to comply with certain federal and state statutes and regulatory
policies, as a matter of operating policy, each Fund and Portfolio will not: (i)
invest more than 5% of its assets in companies which, including predecessors,
have a record of less than three years' continuous operation, (ii) invest in
warrants, valued at the lower of cost or market, in excess of 5% of the value of
its net assets, and no more than 2% of such value may be warrants which are not
listed on the New York or American Stock Exchanges, or (iii) purchase or retain
in its portfolio any securities issued by an issuer any of whose officers,
directors, trustees or security holders is an officer or Trustee of the Trust or
Portfolio, or is an officer or director of the adviser, if after the purchase of
the securities of such issuer by the Fund or Portfolio one or more of such
persons owns beneficially more than 1/2 of 1% of the shares or securities, or
both, all taken at market value, of such issuer, and such persons owning more
than 1/2 of 1% of such shares or securities together own beneficially more than
5% of such shares or securities, or both, all taken at market value.
If a percentage or rating restriction on investment or use of assets
set forth herein or in a Prospectus is adhered to at the time a transaction is
effected, later changes in percentage resulting from any cause other than
actions by a Fund or Portfolio will not be considered a violation. If the value
of a Fund's or Portfolio's holdings of illiquid securities at any time exceeds
the percentage limitation applicable at the time of acquisition due to
subsequent fluctuations in value or other reasons, the Board of Trustees will
consider what actions, if any, are appropriate to maintain adequate liquidity.
Portfolio Transactions and Brokerage Allocation
Specific decisions to purchase or sell securities for a Fund or Portfolio
are made by a portfolio manager who is an employee of the adviser or sub-adviser
to such Fund or Portfolio and who is appointed and supervised by senior officers
of such adviser or sub-adviser. Changes in a Fund's or Portfolio's investments
are reviewed by the Board of Trustees of the Trust or Portfolios. The portfolio
managers may serve other clients of the advisers in a similar capacity.
17
<PAGE>
The frequency of a Fund's or Portfolio's portfolio transactions -- the
portfolio turnover rate -- will vary from year to year depending upon market
conditions. Because a high turnover rate may increase a Fund's or Portfolio's
transaction costs and the possibility of taxable short-term gains, the advisers
will weigh the added costs of short-term investment against anticipated gains.
Each Fund or Portfolio will engage in portfolio trading if its advisers believe
a transaction, net of costs (including custodian charges), will help it achieve
its investment objective.
The portfolio turnover rates for the Global Fixed Income Portfolio and
the International Equity Portfolio for the period December 31, 1992
(commencement of operations) to October 31, 1993 were 456% and 39%,
respectively. For the fiscal year ended October 31, 1994, their portfolio
turnover rates were 345% and 84%, respectively. For the fiscal year ended
October 31, 1995, their portfolio turnover rates were 624% and 137%,
respectively. The International Equity Fund and the Global Fixed Income Fund
invest all of their investable assets in their respective Portfolios and do not
invest directly in a portfolio of assets, and therefore do not have reportable
turnover rates.
For the fiscal period ending October 31, 1996 the annual portfolio
turnover rates for the Southeast Asian Fund, Japan Fund and European Fund are
expected not to exceed 100%.
Under the advisory agreement and the sub-advisory agreements, the adviser
and sub-advisers shall use their best efforts to seek to execute portfolio
transactions at prices which, under the circumstances, result in total costs or
proceeds being the most favorable to the Funds and Portfolios. In assessing the
best overall terms available for any transaction, the adviser and sub-advisers
consider all factors they deem relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, research services provided to the adviser or
sub-advisers, and the reasonableness of the commissions, if any, both for the
specific transaction and on a continuing basis. The adviser and sub-advisers are
not required to obtain the lowest commission or the best net price for any Fund
or Portfolio on any particular transaction, and are not required to execute any
order in a fashion either preferential to any Fund or Portfolio relative to
other accounts they manage or otherwise materially adverse to such other
accounts.
Debt securities are traded principally in the over-the-counter market
through dealers acting on their own account and not as brokers. In the case of
securities traded in the over-the-counter market (where no stated commissions
are paid but the prices include a dealer's markup or markdown), the adviser or
sub-adviser to a Fund or Portfolio normally seeks to deal directly with the
primary market makers unless, in its opinion, best execution is available
elsewhere. In the case of securities purchased from underwriters, the cost of
such securities generally includes a fixed underwriting commission or
concession. From time to time, soliciting dealer fees are available to the
adviser or sub-adviser on the tender of a Fund's or Portfolio's portfolio
securities in so-called tender or exchange offers. Such soliciting dealer fees
are in effect recaptured for the Funds and Portfolios by the adviser and
sub-advisers. At present, no other recapture arrangements are in effect.
Under the advisory and sub-advisory agreements and as permitted by Section
28(e) of the Securities Exchange Act of 1934, the adviser or sub-advisers may
cause the Funds and Portfolios to pay a broker-dealer which provides brokerage
and research services to the adviser or sub-advisers, the Funds or Portfolios
and/or other accounts for which they exercise investment discretion an amount of
commission for effecting a securities transaction for a Fund or Portfolio in
excess of the amount other broker-dealers would have charged for the transaction
if they determine in good faith that the greater commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker-dealer viewed in terms of either a particular transaction or
their overall responsibilities to accounts over which they exercise investment
discretion. Not all of such services are useful or of value in advising the
Funds and Portfolios. The adviser and sub-advisers report to the Board of
Trustees regarding overall commissions paid by the Funds and Portfolios and
their reasonableness in relation to the benefits to the Funds and Portfolios.
The term "brokerage and research services" includes advice as to the value of
securities, the advisability of investing in, purchasing or selling securities,
and the availability of securities or of purchasers or sellers of securities,
furnishing analyses and reports concerning issues, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts,
and effecting securities transactions and performing functions incidental
thereto such as clearance and settlement.
18
<PAGE>
The management fees that the Funds and Portfolios pay to the adviser will
not be reduced as a consequence of the adviser's or sub-advisers' receipt of
brokerage and research services. To the extent the Funds' or Portfolios'
portfolio transactions are used to obtain such services, the brokerage
commissions paid by the Funds or Portfolios will exceed those that might
otherwise be paid by an amount which cannot be presently determined. Such
services generally would be useful and of value to the adviser or sub-advisers
in serving one or more of their other clients and, conversely, such services
obtained by the placement of brokerage business of other clients generally would
be useful to the adviser and sub-advisers in carrying out their obligations to
the Funds and Portfolios. While such services are not expected to reduce the
expenses of the adviser or sub-advisers, they would, through use of the
services, avoid the additional expenses which would be incurred if they should
attempt to develop comparable information through their own staffs.
In certain instances, there may be securities that are suitable for one or
more of the Funds and Portfolios as well as one or more of the adviser's or
sub-adviser's, other clients. Investment decisions for the Funds and Portfolios
and for other clients are made with a view to achieving their respective
investment objectives. It may develop that the same investment decision is made
for more than one client or that a particular security is bought or sold for
only one client even though it might be held by, or bought or sold for, other
clients. Likewise, a particular security may be bought for one or more clients
when one or more clients are selling that same security. Some simultaneous
transactions are inevitable when several clients receive investment advice from
the same investment adviser, particularly when the same security is suitable for
the investment objectives of more than one client. When two or more Funds or
Portfolios or other clients are simultaneously engaged in the purchase or sale
of the same security, the securities are allocated among clients in a manner
believed to be equitable to each. It is recognized that in some cases this
system could have a detrimental effect on the price or volume of the security as
far as the Funds or Portfolios are concerned. However, it is believed that the
ability of the Funds and Portfolios to participate in volume transactions will
generally produce better executions for the Funds and Portfolios.
The Vista International Equity Portfolio paid brokerage commissions as
detailed below:
12/31/91 Year Year
through Ended Ended
10/31/93 10/31/94 10/31/95
----------- ----------- ---------
Vista International
Equity Portfolio $100,779.76 $285,576.81 $383,649
No portfolio transactions are executed with the advisers or a
Shareholder Servicing Agent, or with any affiliate of the advisers or a
Shareholder Servicing Agent, acting either as principal or as broker.
PERFORMANCE INFORMATION
From time to time, a Fund may use hypothetical investment examples and
performance information in advertisements, shareholder reports or other
communications to shareholders. Because such performance information is based on
past investment results, it should not be considered as an indication or
representation of the performance of any classes of a Fund in the future. From
time to time, the performance and yield of classes of a Fund may be quoted and
compared to those of other mutual funds with similar investment objectives,
unmanaged investment accounts, including savings accounts, or other similar
products and to stock or other relevant indices or to rankings prepared by
independent services or other financial or industry publications that monitor
the performance of mutual funds. For example, the performance of a Fund or its
classes may be compared to data prepared by Lipper Analytical Services, Inc. or
Morningstar Mutual Funds on Disc, widely recognized independent services which
monitor the performance of mutual funds. Performance and yield data as reported
in national financial publications including, but not limited to, Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times, or
in local or regional publications, may also be used in comparing the performance
and yield of a Fund or its classes. A Fund's performance may be compared with
indices such as the Lehman Brothers Government/Corporate Bond Index, the Lehman
Brothers Government Bond Index, the Lehman Government Bond 1-3 Year Index and
the Lehman Aggregate Bond Index; the S&P 500 Index, the Dow Jones Industrial
Average or any other commonly quoted index of common stock prices; and the
Russell 2000 Index and the NASDAQ Composite Index. Additionally, a Fund may,
with proper authorization, reprint articles written about such Fund and provide
them to prospective shareholders.
A Fund may provide period and average annual "total rates of return."
The "total rate of return" refers to the change in the value of an investment in
a Fund over a period (which period shall be stated in any advertisement
19
<PAGE>
or communication with a shareholder) based on any change in net asset value per
share including the value of any shares purchased through the reinvestment of
any dividends or capital gains distributions declared during such period. For
Class A shares, the average annual total rate of return figures will assume
payment of the maximum initial sales load at the time of purchase. For Class B
shares, the average annual total rate of return figures will assume deduction of
the applicable contingent deferred sales charge imposed on a total redemption of
shares held for the period. One-, five-, and ten-year periods will be shown,
unless the class has been in existence for a shorter-period.
Unlike some bank deposits or other investments which pay a fixed yield
for a stated period of time, the yields and the net asset values of the classes
of shares of a Fund will vary based on market conditions, the current market
value of the securities held by a Fund and changes in the Fund's expenses. The
advisers, Shareholder Servicing Agents, the Administrator, the Distributor and
other service providers may voluntarily waive a portion of their fees on a
month-to-month basis. In addition, the Distributor may assume a portion of a
Fund's operating expenses on a month-to-month basis. These actions would have
the effect of increasing the net income (and therefore the yield and total rate
of return) of the classes of shares of a Fund during the period such waivers are
in effect. These factors and possible differences in the methods used to
calculate the yields and total rates of return should be considered when
comparing the yields or total rates of return of the classes of shares of a Fund
to yields and total rates of return published for other investment companies and
other investment vehicles (including different classes of shares). The Trust is
advised that certain Shareholder Servicing Agents may credit to the accounts of
their customers from whom they are already receiving other fees amounts not
exceeding the Shareholder Servicing Agent fees received, which will have the
effect of increasing the net return on the investment of customers of those
Shareholder Servicing Agents. Such customers may be able to obtain through their
Shareholder Servicing Agents quotations reflecting such increased return.
Advertising or communications to shareholders may contain the views of
the advisers as to current market, economic, trade and interest rate trends, as
well as legislative, regulatory and monetary developments, and may include
investment strategies and related matters believed to be of relevance to a Fund.
Advertisements for the Vista funds may include references to the asset
size of other financial products made available by Chase, such as the offshore
assets of other funds.
Total Rate of Return
A Fund's or class' total rate of return for any period will be
calculated by (a) dividing (i) the sum of the net asset value per share on the
last day of the period and the net asset value per share on the last day of the
period of shares purchasable with dividends and capital gains declared during
such period with respect to a share held at the beginning of such period and
with respect to shares purchased with such dividends and capital gains
distributions, by (ii) the public offering price per share on the first day of
such period, and (b) subtracting 1 from the result. Any annualized total rate of
return quotation will be calculated by (x) adding 1 to the period total rate of
return quotation as calculated above, (y) raising such sum to a power which is
equal to 365 divided by the number of days in such period, and (z) subtracting 1
from the result.
As of the fiscal year ended October 31, 1995, the average annual total
rates of return for the following Funds, reflecting the initial investment and
reinvested dividends, are listed below:
One Since
Year Inception
- ------------------------------------- ---------- ---------------
Vista Global Fixed Income Fund --
A Shares 9.54% 6.70% (11/4/93)
B Shares 8.82% 4.05% (11/4/94)
Vista International Equity Fund --
A Shares (1.19%) 8.60% (11/4/93)
B Shares (1.61%) 1.69% (11/4/94)
Had the maximum sales charges of 4.50% and 4.75% for Class A shares, and
the applicable CDSC for Class B shares for each period length, been in effect,
the total rates of return would have been:
Since
One Inception
Year (11/4/93)
- ------------------------------------- ---------- ----------------
Vista Global Fixed Income Fund --
A Shares 4.61% 4.98% (11/4/93)
B Shares 3.82% 2.11% (11/4/94)
Vista International Equity Fund --
A Shares (5.88%) 6.75% (11/4/93)
B Shares (6.53%) (0.30%)(11/4/94)
20
<PAGE>
The Funds may also from time to time include in advertisements or other
communications a total return figure that is not calculated according to the
formula set forth above in order to compare more accurately the performance of a
Fund with other measures of investment return.
Yield Quotations
Any current "yield" quotation for a class of shares shall consist of an
annualized historical yield, carried at least to the nearest hundredth of one
percent, based on a thirty calendar day period and shall be calculated by (a)
raising to the sixth power the sum of 1 plus the quotient obtained by dividing
the Fund's net investment income earned during the period by the product of the
average daily number of shares outstanding during the period that were entitled
to receive dividends and the maximum offering price per share on the last day of
the period, (b) subtracting 1 from the result, and (c) multiplying the result by
2.
The yields of the Class A shares of the Global Fixed Income Fund and
the International Equity Fund as of October 31, 1995 were 3.32% and (0.299%),
respectively. The yields of the Class B shares of those Funds were 2.81% and
(0.822%), respectively.
Non-Standardized Performance Results
The table below reflects the net change in the value of an assumed
initial investment of $10,000 in the Fund for the period from the commencement
date of business for each Fund, with values reflecting an assumption that
capital gain distributions and income dividends, if any, have been invested in
additional Shares. From time to time, the Funds will provide these performance
results in addition to the total rate of return quotations required by the
Securities and Exchange Commission. As discussed more fully in the Prospectus,
neither these performance results, nor total rate of return quotations, should
be considered as representative of the performance of the Funds in the future.
These factors and the possible differences in the methods used to calculate
performance results and total rates of return should be considered when
comparing such performance results and total rate of return quotations of the
Funds with those published for other investment companies and other investment
vehicles.
A Shares -
<TABLE>
<CAPTION>
Dec. 31, 1992 Value of Value of Value
through Initial $10,000 Capital Gains Reinvested Total
October 31 1995 Investment Distributions Dividends Value
- ------------------ ---------- ------------- --------- -----
<S> <C> <C> <C> <C>
Vista Global Fixed
Income Fund $10,650.00 -0- $1,168.13 $11,818.13
21
<PAGE>
Vista International
Equity Fund $12,020.00 $198.40 -0- $12,218.40
</TABLE>
Had the maximum sales charge of 4.50% and 4.75%, for the Vista Global
Fixed Income Fund and Vista International Equity Fund, respectively, been in
effect, the figures for the same period would have been as follows:
<TABLE>
<CAPTION>
Dec. 31, 1992 Value of Value of Value
through Initial $10,000 Capital Gains Reinvested Total
October 31, 1995 Investment Distributions Dividends Value
- ---------------- ---------- ------------- --------- -----
<S> <C> <C> <C> <C>
Vista Global Fixed
Income Fund $10,117.75 -0- $1,115.56 $11,286.31
Vista International
Equity Fund 11,449.05 $118.98 -0- 11,638.03
- ---------------------------------------------------------------------------
<CAPTION>
B Shares -
Nov. 4, 1993 Value of Value of Value
through Initial $10,000 Capital Gains Reinvested Total
October 31, 1995 Investment Distributions Dividends Value
- ---------------- ---------- ------------- --------- -----
<S> <C> <C> <C> <C>
Vista Global Fixed
Income Fund $9,743.13 -0- $684.05 $10,427.18
Vista International
Equity Fund 10,171.09 $168.71 -0- 10,339.80
</TABLE>
Had the applicable CDSC for the period been charged upon redemption of
shares acquired on the inception date, the figures for the same period would
have been as follows:
Nov. 4, 1993 Value of Value of Value
through Initial $10,000 Capital Gains Reinvested Total
October 31, 1995 Investment Distributions Dividends Value
- ------------------- --------------- ------------- ---------- ----------
Vista Global Fixed
Income Fund $9,743.13 $0.00 $684.05 $10,427.18
Vista International
Equity Fund 9,771.09 168.71 -0- 9,939.80
DETERMINATION OF NET ASSET VALUE
As of the date of this Statement of Additional Information, the New
York Stock Exchange is open for trading every weekday except for the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Equity securities are valued at the last sale price on the exchange on
which they are primarily traded or on the NASDAQ National Market System, or at
the last quoted bid price for securities in which there were no sales during the
day or for other unlisted (over-the-counter) securities. Bonds and other fixed
income securities (other than short-term obligations, but including listed
issues) are valued on the basis of valuations furnished by a pricing service,
the use of which has been approved by the Board of Trustees. In making such
valuations, the pricing service utilizes both dealer-supplied valuations and
electronic data processing techniques that take into account appropriate factors
such as institutional-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other
market data, without exclusive reliance upon quoted prices or exchange or
over-the-counter prices, since such valuations are believed to reflect more
accurately the fair value of such securities. Short-term obligations which
mature in 60 days or less are valued at amortized cost, which constitutes fair
value as determined by the Board of Trustees. Futures and option contracts that
are traded on commodities or securities exchanges are normally valued at the
settlement price on the exchange on which they are traded. Portfolio securities
(other than short-term obligations) for which there are no such quotations or
valuations are valued at fair value as determined in good faith by or at the
direction of the Board of Trustees.
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<PAGE>
Interest income on long-term obligations is determined on the basis of
interest accrued plus amortization of discount (generally, the difference
between coupon acquisition price and stated redemption price at maturity) and
premiums (generally, the excess of purchase price over stated redemption price
at maturity). Interest income on short-term obligations is determined on the
basis of interest and discount accrued less amortization of premium.
PURCHASES, REDEMPTIONS AND EXCHANGES
The Fund has established certain procedures and restrictions, subject
to change from time to time, for purchase, redemption, and exchange orders,
including procedures for accepting telephone instructions and effecting
automatic investments and redemptions. The Funds' Transfer Agent may defer
acting on a shareholder's instructions until it has received them in proper
form. In addition, the privileges described in the Prospectuses are not
available until a completed and signed account application has been received by
the Transfer Agent. Telephone transaction privileges are made available to
shareholders automatically upon opening an account unless the privilege is
declined in Section 6 of the Account Application.
Upon receipt of any instructions or inquiries by telephone from a
shareholder or, if held in a joint account, from either party, or from any
person claiming to be the shareholder, a Fund or its agent is authorized,
without notifying the shareholder or joint account parties, to carry out the
instructions or to respond to the inquiries, consistent with the service options
chosen by the shareholder or joint shareholders in his or their latest account
application or other written request for services, including purchasing,
exchanging, or redeeming shares of such Fund and depositing and withdrawing
monies from the bank account specified in the Bank Account Registration section
of the shareholder's latest account application or as otherwise properly
specified to such Fund in writing.
Subject to compliance with applicable regulations, each Fund has
reserved the right to pay the redemption price of its Shares, either totally or
partially, by a distribution in kind of portfolio securities (instead of cash).
The securities so distributed would be valued at the same amount as that
assigned to them in calculating the net asset value for the shares being sold.
If a shareholder received a distribution in kind, the shareholder could incur
brokerage or other charges in converting the securities to cash. The Trust has
filed an election under Rule 18f-1 committing to pay in cash all redemptions by
a shareholder of record up to amounts specified by the rule (approximately
$250,000).
With respect to the Vista Global Fixed Income Fund and Vista
International Equity Fund, the Trust will redeem Fund shares in kind only if it
has received a redemption in kind from the corresponding Portfolio and therefore
shareholders of the Fund that receive redemptions in kind will receive portfolio
securities of such Portfolio and in no case will they receive a security issued
by the Portfolio. Each Portfolio has advised the Trust that the Portfolio will
not redeem in kind except in circumstances in which the corresponding Fund is
permitted to redeem in kind or unless requested by the corresponding Fund.
Each investor in a Portfolio, including the corresponding Fund, may add to
or reduce its investment in the Portfolio on each day that the New York Stock
Exchange is open for business. Once on each such day, based upon prices
determined as of the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m., Eastern time, however, options are priced at 4:15 p.m.
Eastern time) the value of each investor's interest in a Portfolio will be
determined by multiplying the net asset value of the Portfolio by the percentage
representing that investor's share of the aggregate beneficial interests in the
Portfolio. Any additions or reductions which are to be effected on that day will
then be effected. The investor's percentage of the aggregate beneficial
interests in a Portfolio will then be recomputed as the percentage equal to the
fraction (i) the numerator of which is the value of such investor's investment
in the Portfolio as of such time on such day plus or minus, as the case may be,
the amount of net additions to or reductions in the investor's investment in the
Portfolio effected on such day and (ii) the denominator of which is the
aggregate net asset value of the Portfolio as of such time on such day plus or
minus, as the case may be, the amount of net additions to or reductions in the
aggregate investments in the Portfolio by all investors in the Portfolio. The
percentage so determined will then be applied to determine the value of the
investor's interest in the Portfolio as of such time on the following day the
New York Stock Exchange is open for trading.
Investors in Class A shares may qualify for reduced initial sales charges
by signing a statement of intention (the "Statement"). This enables the investor
to aggregate purchases of Class A shares in the Fund with purchases of Class A
shares of any other Fund in the Trust (or if a Fund has only one class, shares
of such Fund), excluding shares of any Vista money market fund, during a
13-month period. The sales charge is based on the total amount to be invested in
Class A shares during the 13-month period. All Class A or other qualifying
23
<PAGE>
shares of these Funds currently owned by the investor will be credited as
purchases (at their current offering prices on the date the Statement is signed)
toward completion of the Statement. A 90-day back-dating period can be used to
include earlier purchases at the investor's cost. The 13-month period would then
begin on the date of the first purchase during the 90-day period. No retroactive
adjustment will be made if purchases exceed the amount indicated in the
Statement. A shareholder must notify the Transfer Agent or Distributor whenever
a purchase is being made pursuant to a Statement.
Under the Exchange Privilege, shares may be exchanged for shares of
another fund only if shares of the fund exchanged into are registered in the
state where the exchange is to be made. Shares of a Fund may only be exchanged
into another fund if the account registrations are identical. With respect to
exchanges from any Vista money market fund, shareholders must have acquired
their shares in such money market fund by exchange from one of the Vista
non-money market funds or the exchange will be done at relative net asset value
plus the appropriate sales charge. Any such exchange may create a gain or loss
to be recognized for federal income tax purposes. Normally, shares of the fund
to be acquired are purchased on the redemption date, but such purchase may be
delayed by either fund for up to five business days if a fund determines that it
would be disadvantaged by an immediate transfer of the proceeds.
The contingent deferred sales charge for Class B shares will be waived
for certain exchanges and for redemptions in connection with a Fund's systematic
withdrawal plan, subject to the conditions described in the Prospectuses. In
addition, subject to confirmation of a shareholder's status, the contingent
deferred sales charge will be waived for: (i) a total or partial redemption made
within one year of the shareholder's death or initial qualification for Social
Security disability payments; (ii) a redemption in connection with a Minimum
Required Distribution form an IRA, Keogh or custodial account under section
403(b) of the Internal Revenue Code, (iii) redemptions made from an IRA, Keogh
or custodial account under section 403(b) of the Internal Revenue Code through
an established Systematic Redemption Plan; (iv) distributions from a qualified
plan upon retirement; (v) a redemption resulting from an over-contribution to an
IRA; and (vi) an involuntary redemption of an account balance under $500.
Class B shares automatically convert to Class A shares (and thus are
then subject to the lower expenses borne by Class A shares) after a period of
time specified below has elapsed since the date of purchase (the "CDSC Period"),
together with the pro rata portion of all Class B shares representing dividends
and other distributions paid in additional Class B shares attributable to the
Class B shares then converting. The conversion of Class B shares purchased on or
after May 1, 1996, will be effected at the relative net asset values per share
of the two classes on the first business day of the month following the eighth
anniversary of the original purchase. The conversion of Class B shares purchased
prior to May 1, 1996, will be effected at the relative net asset values per
share of the two classes on the first business day of the month following the
seventh anniversary of the original purchase. If any exchanges of Class B shares
during the CDSC Period occurred, the holding period for the shares exchanged
will be counted toward the CDSC Period. At the time of the conversion the net
asset value per share of the Class A shares may be higher or lower than the net
asset value per share of the Class B shares; as a result, depending on the
relative net asset values per share, a shareholder may receive fewer or more
Class A shares than the number of Class B shares converted.
A Fund may require signature guarantees for changes that shareholders
request be made in Fund records with respect to their accounts, including but
not limited to, changes in bank accounts, for any written requests for
additional account services made after a shareholder has submitted an initial
account application to the Fund, and in certain of the circumstances described
in the Prospectuses. A Fund may also refuse to accept or carry out any
transaction that does not satisfy any restrictions then in effect. A signature
guarantee may be obtained from a bank, trust company, broker-dealer or other
member of a national securities exchange. Please note that a notary public
cannot provide a signature guarantee.
TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting the Funds and their shareholders that are not
described in the respective Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of each Fund or its shareholders, and the
discussion here and in the Prospectus is not intended as a substitute for
careful tax planning.
24
<PAGE>
Qualification as a Regulated Investment Company
Each Fund has elected to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). As a regulated investment company, a Fund is not subject to federal
income tax on the portion of its net investment income (i.e., taxable interest,
dividends and other taxable ordinary income, net of expenses) and capital gain
net income (i.e., the excess of capital gains over capital losses) that it
distributes to shareholders, provided that it distributes at least 90% of its
"investment company taxable income" (i.e., net investment income and the excess
of net short-term capital gain over net long-term capital loss) for the taxable
year (the "Distribution Requirement"), and satisfies certain other requirements
of the Code that are described below. Distributions by a Fund made during the
taxable year or, under specified circumstances, within twelve months after the
close of the taxable year, will be considered distributions of income and gains
of the taxable year and can therefore satisfy the Distribution Requirement.
Because a Fund invests all of its assets in the Portfolio which will be
classified as a partnership for federal income tax purposes, the Fund will be
deemed to own a proportionate share of the income of the Portfolio for purposes
of determining whether the Fund satisfies the Distribution Requirement and the
other requirements necessary to qualify as a regulated investment company (e.g.,
Income Requirement (hereinafter defined), etc.).
In addition to satisfying the Distribution Requirement, a regulated
investment company must (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement"); and (2) derive less
than 30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or foreign
currencies (or options, futures or forward contracts thereon) held for less than
three months (the "Short-Short Gain Test"). However, foreign currency gains,
including those derived from options, futures and forwards, will not in any
event be characterized as Short-Short Gain if they are directly related to the
regulated investment company's investments in stock or securities (or options or
futures thereon). Because of the Short-Short Gain Test, a Fund may have to limit
the sale of appreciated securities that it has held for less than three months.
However, the Short-Short Gain Test will not prevent a Fund from disposing of
investments at a loss, since the recognition of a loss before the expiration of
the three-month holding period is disregarded for this purpose. Interest
(including original issue discount) received by a Fund at maturity or upon the
disposition of a security held for less than three months will not be treated as
gross income derived from the sale or other disposition of such security within
the meaning of the Short-Short Gains Test. However, income that is attributable
to realized market appreciation will be treated as gross income from the sale or
other disposition of securities for this purpose.
In general, gain or loss recognized by a Fund on the disposition of an
asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by a Fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Fund held the debt obligation. In
addition, under the rules of Code Section 988, gain or loss recognized on the
disposition of a debt obligation denominated in a foreign currency or an option
with respect thereto (but only to the extent attributable to changes in foreign
currency exchange rates), and gain or loss recognized on the disposition of a
foreign currency forward contract, futures contract, option or similar financial
instrument, or of foreign currency itself, except for regulated futures
contracts or non-equity options subject to Code Section 1256, will generally be
treated as ordinary income or loss.
Further, the Code also treats as ordinary income, a portion of the
capital gain attributable to a transaction where substantially all of the return
realized is attributable to the time value of a Fund's net investment in the
transaction and: (1) the transaction consists of the acquisition of property by
a Fund and a contemporaneous contract to sell substantially identical property
in the future; (2) the transaction is a straddle within the meaning of Section
1092 of the Code; (3) the transaction is one that was marketed or sold to the
Fund on the basis that it would have the economic characteristics of a loan but
the interest-like return would be taxed as capital gain; or (4) the transaction
is described as a conversion transaction in the Treasury Regulations. The amount
of the gain recharacterized
25
<PAGE>
generally will not exceed the amount of the interest that would have accrued on
the net investment for the relevant period at a yield equal to 120% of the
federal long-term, mid-term, or short-term rate, depending upon the type of
instrument at issue, reduced by an amount equal to: (1) prior inclusions of
ordinary income items from the conversion transaction; and (2) the capitalized
interest on acquisition indebtedness under Code Section 263 (g). Built-in losses
will be preserved where a Fund has a built-in loss with respect to property that
becomes a part of a conversion transaction. No authority exists that indicates
that the converted character of the income will not be passed to a Fund's
shareholders.
In general, for purposes of determining whether capital gain or loss
recognized by a Fund on the disposition of an asset is long-term or short-term,
the holding period of the asset may be affected if (1) the asset is used to
close a "short sale" (which includes for certain purposes the acquisition of a
put option) or is substantially identical to another asset so used, (2) the
asset is otherwise held by a Fund as part of a "straddle" (which term generally
excludes a situation where the asset is stock and the Fund grants a qualified
covered call option (which, among other things, must not be deep-in-the-money)
with respect thereto) or (3) the asset is stock and the Fund grants an
in-the-money qualified covered call option with respect thereto. However, for
purposes of the Short-Short Gain Test, the holding period of the asset disposed
of may be reduced only in the case of clause (1) above. In addition, a Fund may
be required to defer the recognition of a loss on the disposition of an asset
held as part of a straddle to the extent of any unrecognized gain on the
offsetting position.
Any gain recognized by a Fund on the lapse of, or any gain or loss
recognized by the Fund from a closing transaction with respect to, an option
written by the Fund will be treated as a short-term capital gain or loss. For
purposes of the Short-Short Gain Test, the holding period of an option written
by the Fund will commence on the date it is written and end on the date it
lapses or the date a closing transaction is entered into. Accordingly, a Fund
may be limited in its ability to write options which expire within three months
and to enter into closing transactions at a gain within three months of the
writing of options.
Transactions that may be engaged in by a Fund (such as regulated
futures contracts, certain foreign currency contracts, and options on stock
indexes and futures contracts) will be subject to special tax treatment as
"Section 1256 contracts." Section 1256 contracts are treated as if they are sold
for their fair market value on the last business day of the taxable year, even
though a taxpayer's obligations (or rights) under such contracts have not
terminated (by delivery, exercise, entering into a closing transaction or
otherwise) as of to such date. Any gain or loss recognized as a consequence of
the year-end deemed disposition of Section 1256 contracts is taken into account
for the taxable year together with any other gain or loss that was previously
recognized upon the termination of Section 1256 contracts during that taxable
year. Any capital gain or loss for the entire taxable year with respect to
Section 1256 contracts (including any capital gain or loss arising as a
consequence of the year-end deemed sale of such contracts) is generally treated
as 60% long-term capital gain or loss and 40% short-term capital gain or loss. A
Fund, however, may elect not to have this special tax treatment apply to Section
1256 contracts that are part of a "mixed straddle" with other investments of the
Fund that are not Section 1256 contracts. The Internal Revenue Service (the
"IRS") has held in several private rulings that gains arising from Section 1256
contracts will be treated for purposes of the Short-Short Gain Test as being
derived from securities held for not less than three months if the gains arise
as a result of a constructive sale under Code Section 1256.
A Fund may enter into notional principal contracts, including interest
rate swaps, caps, floors and collars. Under Treasury Regulations, in general,
the net income or deduction from a notional principal contract for a taxable
year is included in or deducted from gross income for that taxable year. The net
income or deduction from a notional principal contract for a taxable year equals
the total of all of the periodic payments (generally, payments that are payable
or receivable at fixed periodic intervals of one year or less during the entire
term of the contract) that are recognized from that contract for the taxable
year and all of the non-periodic payments (including premiums for caps, floors
and collars) that are recognized from that contract for the taxable year. No
portion of a payment by a party to a notional principal contract is recognized
prior to the first year to which any portion of a payment by the counterparty
relates. A periodic payment is recognized ratably over the period to which it
relates. In general, a non-periodic payment must be recognized over the term of
the notional principal contract in a manner that reflects the economic substance
of the contract. A non-periodic payment that relates to an interest rate swap,
cap, floor or collar shall be recognized over the term of the contract by
allocating it in accordance with the values of a series of
26
<PAGE>
cash-settled forward or option contracts that reflect the specified index and
notional principal amount upon which the notional principal contract is based
under an alternative method contained in the proposed regulations.
A Fund may purchase securities of certain foreign investment funds or
trusts which constitute passive foreign investment companies ("PFICs") for
federal income tax purposes. If a Fund invests in a PFIC, it may elect to treat
the PFIC as a qualifying electing fund (a "QEF") in which event the Fund will
each year have ordinary income equal to its pro rata share of the PFIC's
ordinary earnings for the year and long-term capital gain equal to its pro rata
share of the PFIC's net capital gain for the year, regardless of whether the
Fund receives distributions of any such ordinary earnings or net capital gain
from the PFIC. If a Fund does not (because it is unable to, chooses not to or
otherwise) elect to treat the PFIC as a QEF, then in general (1) any gain
recognized by the Fund upon sale or other disposition of its interest in the
PFIC or any excess distribution received by the Fund from the PFIC will be
allocated ratably over the Fund's holding period of its interest in the PFIC,
(2) the portion of such gain or excess distribution so allocated to the year in
which the gain is recognized or the excess distribution is received shall be
included in the Fund's gross income for such year as ordinary income (and the
distribution of such portion by the Fund to shareholders will be taxable as an
ordinary income dividend, but such portion will not be subject to tax at the
Fund level), (3) a Fund shall be liable for tax on the portions of such gain or
excess distribution so allocated to prior years in an amount equal to, for each
such prior year, (i) the amount of gain or excess distribution allocated to such
prior year multiplied by the highest tax rate (individual or corporate) in
effect for such prior year plus (ii) interest on the amount determined under
clause (i) for the period from the due date for filing a return for such prior
year until the date for filing a return for the year in which the gain is
recognized or the excess distribution is received at the rates and methods
applicable to underpayments of tax for such period, and (4) the distribution by
a Fund to shareholders of the portions of such gain or excess distribution so
allocated to prior years (net of the tax payable by the Fund thereon) will again
be taxable to the shareholders as an ordinary income dividend.
Under proposed Treasury Regulations issued in 1992 (but not yet
effective), a Fund could elect to recognize as gain the excess as of the last
day of its taxable year, of the fair market value of each share of PFIC stock
over the Fund's adjusted tax basis in that share ("mark-to-market gain"). Such
mark-to-market gain will be included by the Fund as ordinary income, such gain
will not be subject to the Short-Short Gain Test, and the Fund's holding period
with respect to such PFIC stock commences on the first day of the next taxable
year. If the Fund makes such election in the first taxable year it holds PFIC
stock, the Fund will include ordinary income from any mark-to-market gain, if
any, and will not incur the tax described in the previous paragraph.
Treasury Regulations permit a regulated investment company, in
determining its investment company taxable income and net capital gain (i.e.,
the excess of net long-term capital gain over net short-term capital loss) for
any taxable year, to elect (unless it has made a taxable year election for
excise tax purposes as discussed below) to treat all or any part of any net
capital loss, any net long-term capital loss or any net foreign currency loss
incurred after October 31 as if it had been incurred in the succeeding year.
In addition to satisfying the requirements described above, each Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of a Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in securities
of such issuer and as to which the Fund does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses. Generally, an option (call
or put) with respect to a security is treated as issued by the issuer of the
security, not the issuer of the option. However, with regard to forward currency
contracts, there does not appear to be any formal or informal authority which
identifies the issuer of such instrument. For purposes of asset diversification
testing, obligations issued by or guaranteed by agencies and instrumentalities
of the U.S. Government such as the Federal Agricultural Mortgage Corporation,
the Farm Credit System Financial Assistance Corporation, a Federal Home Loan
Bank, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, the Government National Mortgage Corporation, and the Student Loan
Marketing Association are treated as U.S. Government Securities.
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<PAGE>
If for any taxable year a Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (a "taxable year election")). The
balance of such income must be distributed during the next calendar year. For
the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year and (2) exclude
foreign currency gains and losses incurred after October 31 of any year (or
after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and, instead, include such gains and losses in determining ordinary taxable
income for the succeeding calendar year).
Each Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
investors should note that the Fund may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid excise
tax liability.
Fund Distributions
The Fund anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be taxable
to shareholders as ordinary income and treated as dividends for federal income
tax purposes, but they will not qualify for the 70% dividends-received deduction
for corporate shareholders of the Funds.
Dividends paid on Class A and Class B shares are calculated at the same
time. In general, dividends on Class B shares are expected to be lower than
those on Class A shares due to the higher distribution expenses borne by the
Class B shares. Dividends may also differ between classes as a result of
differences in other class specific expenses.
A Fund may either retain or distribute to shareholders its net realized
capital gain for each taxable year. The Funds currently intend to distribute any
such amounts. If net realized capital gain is distributed and designated as a
capital gain dividend, it will be taxable to shareholders as long-term capital
gain, regardless of the length of time the shareholder has held his shares or
whether such gain was recognized by the Fund prior to the date on which the
shareholder acquired his shares.
Conversely, if a Fund elects to retain its net realized capital gain,
the Fund will be taxed thereon (except to the extent of any available capital
loss carryovers) at the 35% corporate tax rate. If a Fund elects to retain its
net realized capital gain, it is expected that the Fund also will elect to have
shareholders of record on the last day of its taxable year treated as if each
received a distribution of his pro rata share of such gain, with the result that
each shareholder will be required to report his pro rata share of such gain on
his tax return as long-term capital gain, will receive a refundable tax credit
for his pro rata share of tax paid by the Fund on the gain, and will increase
the tax basis for his shares by an amount equal to the deemed distribution less
the tax credit.
28
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Investment income that may be received by a Fund from sources within
foreign countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Funds to a reduced rate of, or exemption from, taxes on such income.
It is impossible to determine the effective rate of foreign tax in advance since
the amount of a Fund's assets to be invested in various countries is not known.
If more than 50% of the value of the Fund's total assets at the close of its
taxable year consists of the stock or securities of foreign corporations, the
Fund may elect to "pass through" to the Fund's shareholders the amount of
foreign taxes paid by such Fund. If a Fund so elects, each shareholder would be
required to include in gross income, even though not actually received, his pro
rata share of the foreign taxes paid by the Fund, but would be treated as having
paid his pro rata share of such foreign taxes and would therefore be allowed to
either deduct such amount in computing taxable income or use such amount
(subject to various Code limitations) as a foreign tax credit against federal
income tax (but not both). For purposes of the foreign tax credit limitation
rules of the Code, each shareholder would treat as foreign source income his pro
rata share of such foreign taxes plus the portion of dividends received from a
Fund representing income derived from foreign sources. No deduction for foreign
taxes could be claimed by an individual shareholder who does not itemize
deductions. Each shareholder should consult his own tax advisor regarding the
potential application of foreign tax credits.
Distributions by a Fund that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares, as discussed
below.
Distributions by a Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of a Fund reflects undistributed net
investment income or recognized capital gain net income, or unrealized
appreciation in the value of the assets of the Fund, distributions of such
amounts will be taxable to the shareholder in the manner described above,
although such distributions economically constitute a return of capital to the
shareholder.
Ordinarily, shareholders are required to take distributions by a Fund
into account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
Each Fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of ordinary income dividends and capital gain dividends,
and the proceeds of redemption of shares, paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the IRS for failure to report the
receipt of interest or dividend income properly, or (3) who has failed to
certify to the Fund that it is not subject to backup withholding or that it is a
corporation or other "exempt recipient."
Sale or Redemption of Shares
A shareholder will recognize gain or loss on the sale or redemption of
shares of a Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of such Fund within 30 days before or after the sale or
redemption. In general, any gain or loss arising from (or treated as arising
from) the sale or redemption of shares of a Fund will be considered capital gain
or loss and will be long-term capital gain or loss if the shares were held for
longer than one year. However, any capital loss arising from the sale or
redemption of shares held for six months or less will be treated as a long-term
capital loss to the extent of the amount of capital gain dividends received on
such shares. For this purpose, the special holding period rules of Code Section
246(c)(3) and (4) generally will apply in determining the holding period of
shares. Long-term
29
<PAGE>
capital gains of noncorporate taxpayers are currently taxed at a maximum rate
11.6% lower than the maximum rate applicable to ordinary income. Capital losses
in any year are deductible only to the extent of capital gains plus, in the case
of a noncorporate taxpayer, $3,000 of ordinary income.
If a shareholder (1) incurs a sales load in acquiring shares of a Fund,
(2) disposes of such shares less than 91 days after they are acquired and (3)
subsequently acquires shares of the Fund or another fund at a reduced sales load
pursuant to a right to reinvest at such reduced sales load acquired in
connection with the acquisition of the shares disposed of, then the sales load
on the shares disposed of (to the extent of the reduction in the sales load on
the shares subsequently acquired) shall not be taken into account in determining
gain or loss on the shares disposed of but shall be treated as incurred on the
acquisition of the shares subsequently acquired.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder"), depends on whether the income from
the Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder.
If the income from a Fund is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, ordinary income dividends
paid to a foreign shareholder will be subject to U.S. withholding tax at the
rate of 30% (or lower treaty rate) upon the gross amount of the dividend.
Furthermore, such a foreign shareholder may be subject to U.S. withholding tax
at the rate of 30% (or lower treaty rate) on the gross income resulting from a
Fund's election to treat any foreign taxes paid by it as paid by its
shareholders, but may not be allowed a deduction against this gross income or a
credit against this U.S. withholding tax for the foreign shareholder's pro rata
share of such foreign taxes which it is treated as having paid. Such a foreign
shareholder would generally be exempt from U.S. federal income tax on gains
realized on the sale of shares of the Fund, capital gain dividends and amounts
retained by the Fund that are designated as undistributed capital gains.
If the income from a Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends and any gains realized upon the sale of shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations.
In the case of foreign noncorporate shareholders, a Fund may be
required to withhold U.S. federal income tax at a rate of 31% on distributions
that are otherwise exempt from withholding tax (or taxable at a reduced treaty
rate) unless such shareholders furnish the Fund with proper notification of its
foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in a Fund,
including the applicability of foreign taxes.
Effect of Future Legislation; Local Tax Considerations
The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and the Treasury Regulations issued thereunder
as in effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and
capital gain dividends from regulated investment companies often differ from the
rules for U.S. federal income taxation described above. Shareholders are urged
to consult their tax advisers as to the consequences of these and other state
and local tax rules affecting investment in a Fund.
30
<PAGE>
MANAGEMENT OF THE TRUST AND FUNDS OR PORTFOLIOS
Trustees and Officers
The Trustees and officers of the Trust and their principal occupations
for at least the past five years are set forth below. Their titles may have
varied during that period. Unless otherwise indicated below, the address of each
officer is 125 West 55th Street, New York, New York 10019.
Fergus Reid, III - Chairman of the Trust. Chairman and Chief Executive
Officer, Lumelite Corporation, since September 1985; Trustee, Morgan Stanley
Funds. Age:63. Address: 202 June Road, Stamford, CT 06903.
Richard E. Ten Haken - Trustee. Former District Superintendent of
Schools, Monroe No. 2 and Orleans Counties, New York; Chairman of the Finance
and the Audit and Accounting Committees, Member of the Executive Committee;
Chairman of the Board and President, New York State Teachers' Retirement System.
Age: 61. Address: 4 Barnfield Road, Pittsford, NY 14534.
William J. Armstrong - Trustee. Vice President and Treasurer,
Ingersoll-Rand Company. Age: 54. Address: 49 Aspen Way, Upper Saddle River, NJ
07458.
John R.H. Blum - Attorney in private practice; formerly, partner in the
law firm of Richards, O'Neil & Allegaert; Commissioner of Agriculture - State of
Connecticut, 1992-1995. Age: 66. Address: 322 Main Street, Lakeville, CT 06039.
Joseph J. Harkins - Trustee. Retired; Commercial Sector Executive and
Executive Vice President of The Chase Manhattan Bank, N.A. from 1985 through
1989. He has been employed by Chase in numerous capacities and offices since
1954. Director of Blessings Corporation, Jefferson Insurance Company of New
York, Monticello Insurance Company and National. Age: 64. Address: 257
Plantation Circle South, Ponte Vedra Beach, FL 32082.
*H. Richard Vartabedian - Trustee and President of the Trust; Chairman of
the Portfolios. Consultant, Republic Bank of New York; formerly, Senior
Investment Officer, Division Executive of the Investment Management Division of
The Chase Manhattan Bank, N.A., 1980 through 1991. Age: 60. Address: P.O. Box
296, Beach Road, Hendrick's Head, Southport, ME 04576.
Stuart W. Cragin, Jr. - Trustee. Retired; formerly President, Fairfield
Testing Laboratory, Inc. He has previously served in a variety of marketing,
manufacturing and general management positions with Union Camp Corp., Trinity
Paper & Plastics Corp., and Conover Industries. Age: 63. Address: 108 Valley
Road, Cos Cob, CT 06807.
Irving L. Thode - Trustee. Retired; formerly Vice President of Quotron
Systems. He has previously served in a number of executive positions with
Control Data Corp., including President of its Latin American Operations, and
General Manager of its Data Services business. Age: 64. Address: 80 Perkins
Road, Greenwich, CT 06830.
*W. Perry Neff - Trustee. Independent Financial Consultant; Director of
North America Life Assurance Co., Petroleum & Resources Corp. and The Adams
Express Co.; Director and Chairman of The Hanover Funds, Inc.; Director,
Chairman and President of The Hanover Investment Funds, Inc. Age: 68. Address:
RR 1 Box 102, Weston, VT 05181.
Roland R. Eppley, Jr. - Trustee. Retired: formerly President and Chief
Executive Officer, Eastern States Bankcard Association Inc, (1971-1988);
Director, Janel Hydraulics, Inc.; Director of The Hanover Funds, Inc. Age: 63.
Address: 105 Coventry Place, Palm Beach Gardens, FL 33418.
31
<PAGE>
W.D. MacCallan - Trustee. Director of The Adams Express Co. and
Petroleum & Resources Corp.; formerly Chairman of the Board and Chief Executive
Officer of The Adams Express Co. and Petroleum & Resources Corp.; Director of
The Hanover Funds, Inc. and The Hanover Investment Funds, Inc. Age: 68. Address:
624 East 45th Street, Savannah, GA 31405
Martin R. Dean - Treasurer and Assistant Secretary. Associate
Director, Accounting Services, BISYS Fund Services; formerly Senior Manager,
KPMG Peat Marwick (1987-1994). Age: 32. Address: 3435 Stelzer Road, Columbus, OH
43219.
Ann E. Bergin - Secretary. First Vice President, BISYS Fund Services,
Inc.; formerly, Senior Vice President, administration, Concord Financial Group
(1991-1995); Assistant Vice President, Dreyfus Service Corporation (1982-1991).
Age: 35. Address: 125 West 55th Street, New York, NY 10019.
- ---------------
* Asterisks indicate those Trustees that are "Interested Persons" (as defined
in the 1940 Act). Mr. Reid is not an interested person of the Trust's
investment advisers or principal underwriter, but may be deemed an
interested person of the Trust solely by reason of being an officer of the
Trust.
The Board of Trustees of the Trust presently has an Audit Committee. The
members of the Audit Committee are Messrs. Ten Haken (Chairman), Blum, Cragin,
Thode, Armstrong, Harkins, Reid, and Vartabedian. The function of the Audit
Committee is to recommend independent auditors and monitor accounting and
financial matters. The Audit Committee met two times during the fiscal year
ended October 31, 1995.
The Board of Trustees of the Trust has established an Investment
Committee. The members of the Investment Committee are Messrs. Vartabedian
(Chairman) and Reid, as well as Leonard M. Spalding, President of Vista Capital
Management. The function of the Investment Committee is to review the investment
management process of the Trust.
Remuneration of Trustees and Certain Executive Officers:
Each Trustee is reimbursed for expenses incurred in attending each
meeting of the Board of Trustees or any committee thereof. Each Trustee who is
not an affiliate of the adviser is compensated for his or her services according
to a fee schedule which recognizes the fact that each Trustee also serves as a
Trustee of other investment companies advised by the adviser. Each Trustee
receives a fee, allocated among all investment companies for which the Trustee
serves, which consists of an annual retainer component and a meeting fee
component. Effective August 21, 1995, each Trustee of the Vista Funds receives a
quarterly retainer of $12,000 and an additional per meeting fee of $1,500. Prior
to August 21, 1995, the quarterly retainer was $9,000 and the per-meeting fee
was $1,000. The Chairman of the Trustees and the Chairman of the Investment
Committee each receive a 50% increment over regular Trustee total compensation
for serving in such capacities for all the investment companies advised by the
adviser.
Set forth below is information regarding compensation paid or accrued
during the fiscal year ended October 31, 1995 for each Trustee of the Trust:
<TABLE>
<CAPTION>
Growth
Equity and Capital
Balanced Income Income Growth Equity Bond
Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Fergus Reid, III, Trustee $241.30 $96.13 $14,393.16 $7,594.67 $540.99 $468.64
Richard E. Ten Haken, Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41
William J. Armstrong, Trustee 160.88 64.07 9595.45 5,063.12 360.67 312.41
John R.H. Blum, Trustee 190.83 62.60 9,376.63 4,955.42 352.06 305.11
Joseph J. Harkins, Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41
H. Richard Vartabedian, Trustee 169.60 67.79 10,159.13 5,376.61 330.18 330.18
Stuart W. Cragin, Jr., Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41
Irving L. Thode, Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41
W. Perry Neff, Trustee 0 0 0 0 0 0
Ronald R. Eppley, Jr., Trustee 0 0 0 0 0 0
W.D. MacCallan, Trustee 0 0 0 0 0 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short
Term Small Inter- Global
Bond U.S. Cap national Fixed Southeast
Fund Government Equity Equity Income Asian Japan European
---- Fund Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fergus Reid, III, Trustee $298.13 $919.27 $172.16 $315.97 $8.47 0 0 0
Richard E. Ten Haken, Trustee 195.40 612.85 114.79 210.64 5.64 0 0 0
William J. Armstrong, Trustee 195.40 612.85 114.79 210.64 5.64 0 0 0
John R.H. Blum, Trustee 190.83 598.68 114.79 205.42 5.64 0 0 0
Joseph J. Harkins, Trustee 195.40 612.85 114.79 210.64 5.64 0 0 0
32
<PAGE>
H. Richard Vartabedian, Trustee 206.44 646.75 133.68 219.47 5.64 0 0 0
Stuart W. Cragin, Jr., Trustee 195.40 612.85 114.79 210.64 5.64 0 0 0
Irving L. Thode, Trustee 195.40 612.85 114.79 210.64 5.64 0 0 0
W. Perry Neff, Trustee 0 0 0 0 0 0 0 0
Ronald R. Eppley, Jr., Trustee 0 0 0 0 0 0 0 0
W.D. MacCallan, Trustee 0 0 0 0 0 0 0 0
</TABLE>
Pension or Total
Retirement Compensation
Benefits Accrued from
as Fund Expenses "Fund Complex"(1)
---------------- ------------------
Fergus Reid, III, Trustee 0 $78,456.65
Richard E. Ten Haken, 0 52,304.39
Trustee
William J. Armstrong, 0 52,304.39
Trustee
John R.H. Blum, Trustee 0 51,304.37
Joseph J. Harkins, Trustee 0 52,304.39
H. Richard Vartabedian, 0 74,804.44
Trustee
Stuart W. Cragin, Jr., 0 52,304.39
Trustee
Irving L. Thode, Trustee 0 52,304.39
W. Perry Neff, 0 0
Trustee
Ronald R. Eppley, Jr., 0 0
Trustee
W.D. MacCallan, 0 0
Trustee
(1) Data reflects total compensation earned during the period January 1,
1995 to December 31, 1995 for service as a Trustee to all Funds
advised by the adviser.
Vista Funds Retirement Plan for Eligible Trustees
Effective August 21, 1995, the Trustees also instituted a Retirement
Plan for Eligible Trustees (the "Plan") pursuant to which each Trustee (who is
not an employee of any of the Funds, the adviser or sub-adviser, Administrator
or distributor or any of their affiliates) may be entitled to certain benefits
upon retirement from the Board of Trustees. Pursuant to the Plan, the normal
retirement date is the date on which the eligible Trustee has attained age 65
and has completed at least five years of continuous service with one or more of
the investment companies advised by the adviser (collectively, the "Covered
Funds"). Each Eligible Trustee is entitled to receive from the Covered Funds an
annual benefit commencing on the first day of the calendar quarter coincident
with or following his date of retirement equal to 10% of the highest annual
compensation received from the Covered Funds multiplied by the number of such
Trustee's years of service (not in excess of 10 years) completed with respect to
any of the Covered Funds. Such benefit is payable to each eligible Trustee in
monthly installments for the life of the Trustee.
Set forth below in the table below are the estimated annual benefits
payable to an eligible Trustee upon retirement assuming various compensation and
years of service classifications. The estimated credited years of service for
Messrs. Reid, Ten Haken, Armstrong, Blum, Harkins, Vartabedian, Cragin, and
Thode are 11, 11, 8, 11, 5, 3, 3 and 3 respectively.
33
<PAGE>
Highest Annual Compensation Paid by All Vista Funds
-----------------------------------------------------------
$40,000 $45,000 $50,000 $55,000
Years of
Service Estimated Annual Benefits Upon Retirement
------- -----------------------------------------
10 $40,000 $45,000 $50,000 $55,000
9 36,000 40,500 45,000 49,500
8 32,000 36,000 40,000 44,000
7 28,000 31,500 35,000 38,500
6 24,000 27,000 30,000 33,000
5 20,000 22,500 25,000 27,500
Effective August 21, 1995, the Trustees instituted a Deferred
Compensation Plan for Eligible Trustees (the "Deferred Compensation Plan")
pursuant to which each Trustee (who is not an employee of any of the Funds, the
adviser, administrator or distributor or any of their affiliates) may enter into
agreements with the Funds whereby payment of the Trustees' fees are deferred
until the payment date elected by the Trustee (or the Trustee's termination of
service). The deferred amounts are deemed invested in shares of the Fund on
whose Board the Trustee sits. The deferred amounts are paid out in a lump sum or
over a period of several years as elected by the Trustee at the time of
deferral. If a deferring Trustee dies prior to the distribution of amounts held
in the deferral account, the balance of the deferral account will be distributed
to the Trustee's designated beneficiary in a single lump sum payment as soon as
practicable after such deferring Trustee's death.
Messrs. Ten Haken, Thode and Vartabedian have each executed a deferred
compensation agreement for the 1996 calendar year and as of March 29, 1996 each
Eligible Trustee has contributed $4,700, $9,500 and $14,250, respectively.
The Declaration of Trust provides that the Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Trust, unless, as to liability to the Trust or its shareholders, it is finally
adjudicated that they engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in their offices or with
respect to any matter unless it is finally adjudicated that they did not act in
good faith in the reasonable belief that their actions were in the best interest
of the Trust. In the case of settlement, such indemnification will not be
provided unless it has been determined by a court or other body approving the
settlement or other disposition, or by a reasonable determination based upon a
review of readily available facts, by vote of a majority of disinterested
Trustees or in a written opinion of independent counsel, that such officers or
Trustees have not engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of their duties.
As of October 31, 1995, the Trustees and officers as a group owned less
than 1% of each Fund's outstanding shares, all of which were acquired for
investment purposes. For the fiscal year ended October 31, 1995, the Trust paid
its disinterested Trustees fees and expenses for all of the meetings of the
Board and any committees attended in the aggregate amount of approximately
$39,790 which amount is then apportioned between the Funds comprising the Trust.
Adviser and Sub-Adviser
Chase acts as investment adviser to the Funds or Portfolios pursuant to
an Investment Advisory Agreement dated May 6, 1996 (the "Advisory Agreement").
Subject to such policies as the Board of Trustees may determine, Chase is
responsible for investment decisions for the Funds or Portfolios. Pursuant to
the terms of the Advisory Agreement, Chase provides the Funds or Portfolios with
such investment advice and supervision as it deems necessary for the proper
supervision of the Funds' or Portfolios' investments. The advisers continuously
provide investment programs and determine from time to time what securities
shall be purchased, sold or exchanged and what portion of the Funds' or
Portfolios' assets shall be held uninvested. The advisers to the Funds or
Portfolios furnish, at their own expense, all services, facilities and personnel
necessary in connection with managing the investments and effecting portfolio
transactions for the Funds or Portfolios. The Advisory Agreement for the Funds
or Portfolios will continue in effect from year to year only if such continuance
is specifically approved at least annually by the Board of Trustees or by vote
of a majority of a Fund's or Portfolio's outstanding voting securities and by a
majority of the Trustees who are not parties to the Advisory Agreement or
interested persons of any such party, at a meeting called for the purpose of
voting on such Advisory Agreement.
34
<PAGE>
Under the Advisory Agreement, the adviser may utilize the
specialized portfolio skills of all its various affiliates, thereby providing
the Funds with greater opportunities and flexibility in accessing investment
expertise.
Pursuant to the terms of the Advisory Agreement and the sub-advisers'
agreements with the adviser, the adviser and sub-advisers are permitted to
render services to others. Each advisory agreement is terminable without penalty
by the Trust on behalf of the Funds on not more than 60 days', nor less than 30
days', written notice when authorized either by a majority vote of a Fund's
shareholders or by a vote of a majority of the Board of Trustees of the Trust,
or by the adviser or sub-adviser on not more than 60 days', nor less than 30
days', written notice, and will automatically terminate in the event of its
"assignment" (as defined in the 1940 Act). The advisory agreements provide that
the adviser or sub-adviser under such agreement shall not be liable for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of portfolio transactions
for the respective Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties thereunder.
With respect to the Funds or Portfolios investing in equity securities,
the equity research team of the adviser looks for two key variables when
analyzing stocks for potential investment by equity portfolios: value and
momentum. To uncover these qualities, the team uses a combination of
quantitative analysis, fundamental research and computer technology to help
identify undervalued stocks.
In the event the operating expenses of the Funds, including all
investment advisory, administration and sub-administration fees, but excluding
brokerage commissions and fees, taxes, interest and extraordinary expenses such
as litigation, for any fiscal year exceed the most restrictive expense
limitation applicable to the Funds imposed by the securities laws or regulations
thereunder of any state in which the shares of the Funds are qualified for
sales, as such limitations may be raised or lowered from time to time, the
adviser shall reduce its advisory fee (which fee is described below) to the
extent of its share of such excess expenses. The amount of any such reduction to
be borne by the adviser shall be deducted from the monthly advisory fee
otherwise payable with respect to the Funds during such fiscal year; and if such
amounts should exceed the monthly fee, the adviser shall pay to a Fund its share
of such excess expenses no later than the last day of the first month of the
next succeeding fiscal year.
Under the Advisory Agreement, Chase may delegate a portion of its
responsibilities to a sub-adviser. In addition, the Advisory Agreement provides
that Chase may render services through its own employees or the employees of one
or more affiliated companies that are qualified to act as an investment adviser
of the Fund and are under the common control of Chase as long as all such
persons are functioning as a part of an organized group of persons, managed by
authorized officers of Chase.
Chase, on behalf of the Funds or Portfolios, has entered into an
investment sub-advisory agreement dated as of May 6, 1996 with Chase Asset
Management, Inc. ("CAM"). With respect to the day-to-day management of the Funds
or Portfolios, CAM makes decisions concerning, and places all orders for,
purchases and sales of securities and helps maintain the records relating to
such purchases and sales. CAM may, in its discretion, provide such services
through its own employees or the employees of one or more affiliated companies
that are qualified to act as an investment adviser to the Company under
applicable laws and are under the common control of Chase; provided that (i) all
persons, when providing services under the sub-advisory agreement, are
functioning as part of an organized group of persons, and (ii) such organized
group of persons is managed at all times by authorized officers of the
sub-advisers. This arrangement will not result in the payment of additional fees
by the Funds.
Chase, a wholly-owned subsidiary of The Chase Manhattan Corporation, a
registered bank holding company, is a commercial bank offering a wide range of
banking and investment services to customers throughout the United States and
around the world. The Chase Manhattan Corporation is the entity resulting from
the merger of The Chase Manhattan Corporation into Chemical Banking Corporation
on March 31, 1996. Chemical Banking Corporation was thereupon renamed The Chase
Manhattan Corporation. Also included among Chase's accounts are commingled trust
funds and a broad spectrum of individual trust and investment management
portfolios. These accounts have varying investment objectives.
CAM is a wholly-owned operating subsidiary of the Adviser. CAM is
registered with the Securities and Exchange Commission as an investment adviser
and was formed for the purpose of providing discretionary investment advisory
services to institutional clients and to consolidate Chase's investment
management function, and the same individuals who serve as portfolio managers
for CAM also serve as portfolio managers for Chase.
In consideration of the services provided by the adviser pursuant to the
Advisory Agreement, the adviser is entitled to receive from each Fund or
Portfolio an investment advisory fee computed daily and paid monthly based on a
rate equal to a percentage of such Fund's or Portfolio's average daily net
assets specified in the relevant Prospectuses. However, the adviser may
voluntarily agree to waive a portion of its fees payable to it on a
month-to-month basis. For its services under its sub-advisory agreement, CAM
will be entitled to receive, with respect to each Fund or Portfolio, such
compensation, payable by the adviser out of its advisory fee, as is described in
the relevant Prospectuses.
For the period December 31, 1992 to October 31, 1993 (commencement of
operations), and the fiscal years ended October 31, 1994 and 1995, Chase accrued
the following investment advisory fees with respect to the following Portfolios,
and voluntarily waived the amounts in parentheses following such fees with
respect to each such period:
December 31, 1992 Fiscal Year Ended
to October 31,
October 31, 1993 -----------------------------------------
------------------- 1994 1995
Fund accrued waived accrued waived accrued waived
- -------------------------------------------------------------------------------
International
Equity
Portfolio* ($ 63,377)($63,377) $462,855 ($202,144) $431,019 ($276,302)
Global Fixed
Income
Portfolio* $180,250 ($ 1,334) $537,782 -- $686,268 --
* The International Equity Fund and the Global Fixed Income Fund do not have an
investment adviser because the Trust seeks to achieve the investment objective
of the Funds by investing all of the investable assets of each respective Fund
in each respective Portfolio.
Administrator
Pursuant to separate Administration Agreements, dated as of October 13,
1996 (the "Administration Agreements"), Chase is the administrator of the Funds
and the administrator of each Portfolio. Chase provides certain administrative
services, including, among other responsibilities, coordinating the negotiation
of contracts and fees with, and the monitoring of performance and billing of,
independent contractors and agents; preparation for signature by an officer of
all documents required to be filed for compliance with applicable laws and
regulations excluding those of the securities laws of various states; arranging
for the computation of performance data, including net asset value and yield;
responding to shareholder inquiries, and arranging for the maintenance of books
and records and providing, at their own expense, office facilities, equipment
and personnel necessary to carry out their duties. Chase has no responsibility
or authority for any matter pertaining to the distribution of Fund shares. The
Administration Agreements provide that the administrators may render
administrative services to others. The Administration Agreements also provide
that neither the administrators nor their personnel shall be liable for any
error of judgment or mistake of law or for any act or omission in the
administration or management of the Funds or the Portfolios, except for wilful
misfeasance, bad faith or gross negligence in the performance of their duties or
by reason of reckless disregard of their obligations and duties under the
Administration Agreements.
In addition, the Administration Agreements provide that, in the event
the operating expenses of any Fund and its respective Portfolio, including all
investment advisory, administration and sub-administration fees, but excluding
brokerage commissions and fees, taxes, interest and extraordinary expenses such
as litigation, for any fiscal year exceed the most restrictive expense
limitation applicable to that Fund imposed by the securities laws or regulations
thereunder of any state in which the shares of such Fund are qualified for sale,
as such limitations may be raised or lowered from time to time, Chase shall
reduce its administration fee (which fee is described below) to the extent of
its share of such excess expenses. The amount of any such reduction shall be
deducted from the monthly administration fee otherwise payable during such
fiscal year; and if such amounts should exceed the monthly fee, Chase shall pay
to such Fund its share of such excess expenses no later than the last day of the
first month of the next succeeding fiscal year.
In consideration of the services provided by Chase pursuant to the
administration agreements, the Administrator receives from each Fund a fee
computed daily and paid monthly at an annual rate equal to 0.10% of each of the
Fund's average daily net assets, on an annualized basis for the Fund's
then-current fiscal year, except that with respect to the Global Fixed Income
Fund and International Equity Fund, Chase receives from each of the Funds and
the Portfolios a fee computed daily and paid monthly at an annual rate equal to
0.05% of their respective average daily net assets. Chase may voluntarily waive
a portion of the fees payable to it with respect to each Fund on a
month-to-month basis.
For the fiscal period December 31, 1992 (commencement of operations)
through October 31, 1993, and the fiscal years ended October 31, 1994 and 1995,
Chase was paid or accrued administration fees with respect to the Vista Global
Fixed Income Fund and Vista International Equity Fund and voluntarily waived the
amount in parentheses following such fees:
35
<PAGE>
12/31/92 11/1/93 11/1/94
through through through
10/31/93 10/31/94 10/31/95
--------------- ----------------- ----------------
Global Fixed
Income Fund: $449 ($449) $1,097 ($1,097) $916 ($916)
International
Equity Fund: $1,938 ($1,938) $16,367 ($16,367) $18,799 ($18,799)
Distributor
Distribution Plan
The Trust has adopted separate plans of distribution pursuant to Rule
12b-1 under the 1940 Act (a "Distribution Plan") on behalf of certain classes or
shares of certain Funds as described in the Prospectuses, which provide that
such classes of such Funds shall pay for distribution services a distribution
fee (the "Distribution Fee"), including payments to the Distributor, at annual
rates not to exceed the amounts set forth in their respective Prospectuses. The
Distributor may use all or any portion of such Class A Distribution Fee to pay
for Fund expenses of printing prospectuses and reports used for sales purposes,
expenses of the preparation and printing of sales literature and other such
distribution-related expenses.
Class B shares pay a Distribution Fee of up to 0.75% of average daily
net assets. The Distributor currently expects to pay sales commissions to a
dealer at the time of sale of Class B shares of up to 4.00% of the purchase
price of the shares sold by such dealer. The Distributor will use its own funds
(which may be borrowed or otherwise financed) to pay such amounts. Because the
Distributor will receive a maximum Distribution Fee of 0.75% of average daily
net assets with respect to Class B shares, it will take the Distributor several
years to recoup the sales commissions paid to dealers and other sales expenses.
Some payments under the Distribution Plans may be used to compensate
broker-dealers with trail or maintenance commissions in an amount not to exceed
0.25% annualized of the average net asset value of Class A shares, or 0.25%
annualized of the average net asset value of the Class B shares maintained in a
Fund by such broker-dealers' customers. Trail or maintenance commissions on
Class B shares will be paid to broker-dealers beginning the 13th month following
the purchase of such Class B shares. Since the distribution fees are not
directly tied to expenses, the amount of distribution fees paid by a Fund during
any year may be more or less than actual expenses incurred pursuant to the
Distribution Plans. For this reason, this type of distribution fee arrangement
is characterized by the staff of the Securities and Exchange Commission as being
of the "compensation variety" (in contrast to "reimbursement" arrangements by
which a distributor's payments are directly linked to its expenses). With
respect to Class B shares, because of the 0.75% annual limitation on the
compensation paid to the Distributor during a fiscal year, compensation relating
to a large portion of the commissions attributable to sales of Class B shares in
any one year will be accrued and paid by a Fund to the Distributor in fiscal
years subsequent thereto. In determining whether to purchase Class B shares,
investors should consider that compensation payments could continue until the
Distributor has been fully reimbursed for the commissions paid on sales of Class
B shares. However, the shares are not liable for any distribution expenses
incurred in excess of the Distribution Fee paid.
Each class of shares is entitled to exclusive voting rights with
respect to matters concerning its Distribution Plan.
Each Distribution Plan provides that it will continue in effect
indefinitely if such continuance is specifically approved at least annually by a
vote of both a majority of the Trustees and a majority of the Trustees who are
not "interested persons" (as defined in the 1940 Act) of the Trust and who have
no direct or indirect financial interest in the operation of the Distribution
Plans or in any agreement related to such Plan ("Qualified Trustees"). The
continuance of each Distribution Plan was most recently approved on October 13,
1995. The Distribution Plans require that the Trust shall provide to the Board
of Trustees, and the Board of Trustees shall review, at least quarterly, a
written report of the amounts expended (and the purposes therefor) under the
Distribution Plans. The Distribution Plans further provides that the selection
and nomination of Qualified Trustees shall be committed to the discretion of the
disinterested Trustees (as defined in the 1940 Act) then in office. The
Distribution Plans may be terminated at any time by a vote of a majority of the
Qualified Trustees or, with
36
<PAGE>
respect to a particular Fund, by vote of a majority of the outstanding voting
Shares of the class of such Fund to which it applies (as defined in the 1940
Act). The Distribution Plans may not be amended to increase materially the
amount of permitted expenses thereunder without the approval of shareholders and
may not be materially amended in any case without a vote of the majority of both
the Trustees and the Qualified Trustees. Each of the Funds will preserve copies
of any plan, agreement or report made pursuant to a Distribution Plan for a
period of not less than six years from the date of the Distribution Plan, and
for the first two years such copies will be preserved in an easily accessible
place.
For the fiscal period December 31, 1992 (commencement of operations)
through October 31, 1993, and the fiscal years ended October 31, 1994 and 1995,
the Distributor was paid or accrued distribution fees with respect to the Income
Fund and Equity Fund and voluntarily waived the amount in parentheses following
such fees:
12/31/92 11/1/93 11/1/94
through through through
10/31/93 10/31/94 10/31/95
--------------- --------------- ----------------
A Shares -
Global Fixed
Income Fund: $2,246 ($2,246) $ 5,120 $ 3,697
International
Equity Fund: $9,683 ($9,683) $73,552 $75,652
B Shares -
Global Fixed
Income Fund: -- $1,100
International
Equity Fund: -- $24,853
With respect to the share of the Class A shares of the Funds, the Basic
Distribution Fee was allocated as follows:
Printing, Postage Sales Advertising &
FUND and Handling Compensation Administrative Filings
- ------------- ----------------- ------------ -----------------------
Global Fixed
Income Fund $791 $2,266 $639
International
Equity Fund $16,182 $46,375 $13,080
Distribution and Sub-Administration Agreement
The Trust has entered into a Distribution and Sub-Administration
Agreement dated August 24, 1995 (the "Distribution Agreement") with the
Distributor, pursuant to which the Distributor acts as the Funds' exclusive
underwriter, provides certain administration services and promotes and arranges
for the sale of each class of Shares. The Distributor is a wholly-owned
subsidiary of BISYS Fund Services, Inc. The Distribution Agreement provides that
the Distributor will bear the expenses of printing, distributing and filing
prospectuses and statements of additional information and reports used for sales
purposes, and of preparing and printing sales literature and advertisements not
paid for by the Distribution Plan. The Trust pays for all of the expenses for
qualification of the shares of each Fund for sale in connection with the public
offering of such shares, and all legal expenses in connection therewith. In
addition, pursuant to the Distribution Agreement, the Distributor provides
certain sub-administration services to the Trust, including providing officers,
clerical staff and office space.
The Distribution Agreement is currently in effect and will continue in
effect thereafter with respect to each Fund only if such continuance is
specifically approved at least annually by the Board of Trustees or by vote of a
majority of such Fund's outstanding voting securities and, in either case, by a
majority of the Trustees who are not parties to the Distribution Agreement or
"interested persons" (as defined in the 1940 Act) of any such party. The
Distribution Agreement is terminable without penalty by the Trust on behalf of
each Fund on 60 days' written notice when authorized either by a majority vote
of such Fund's shareholders or by vote of a majority of the Board of Trustees of
the Trust, including a majority of the Trustees who are not "interested persons"
(as defined in the 1940 Act) of the Trust, or by the Distributor on 60 days'
written notice, and will automatically terminate in the event of its
"assignment" (as defined in the 1940 Act). The Distribution Agreement also
provides that neither the Distributor nor its personnel shall be liable for any
act or omission in the course of, or connected with, rendering services under
the Distribution Agreement, except for wilful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations or duties.
In the event the operating expenses of any Fund, including all investment
advisory, administration and sub-administration fees, but excluding brokerage
commissions and fees, taxes, interest and extraordinary expenses such as
litigation, for any fiscal year exceed the most restrictive expense limitation
applicable to that Fund imposed by the securities laws or regulations thereunder
of any state in which the shares of such Fund are qualified for sale, as such
limitations may be raised or lowered from time to time, the Distributor shall
reduce its sub-administration fee with respect to such Fund (which fee is
described below) to the extent of its share of such excess expenses. The
37
<PAGE>
amount of any such reduction to be borne by the Distributor shall be deducted
from the monthly sub-administration fee otherwise payable with respect to such
Fund during such fiscal year; and if such amounts should exceed the monthly fee,
the Distributor shall pay to such Fund its share of such excess expenses no
later than the last day of the first month of the next succeeding fiscal year.
In consideration of the sub-administration services provided by the
Distributor pursuant to the Distribution Agreement, the Distributor receives an
annual fee, payable monthly, of 0.05% of the net assets of each Fund. The
Distributor may voluntarily waive a portion of the fees payable to it under the
Distribution Agreement with respect to each Fund on a month-to-month basis. For
the fiscal period December 31, 1992 (commencement of operations) through October
31, 1993, and the fiscal years ended October 31, 1994 and 1995, the Distributor
was paid or accrued sub-administration fees with respect to the Global Fixed
Income Fund and International Equity Fund and voluntarily waived the amount in
parentheses following such fees:
12/31/92 11/1/93 11/1/94
through through through
10/31/93 10/31/94 10/31/95
--------------- ---------------- --------------------
Global Fixed
Income Fund: $449 ($449) $1,097 ($1,097) $916 ($916)
International
Equity Fund: $1,938 ($1,938) $16,367 ($16,367) $18,799 ($18,799)
Shareholder Servicing Agents, Transfer Agent and Custodian
The Trust has entered into a shareholder servicing agreement (a
"Servicing Agreement") with each Shareholder Servicing Agent to provide certain
services including but not limited to the following: answer customer inquiries
regarding account status and history, the manner in which purchases and
redemptions of shares may be effected for the Fund as to which the Shareholder
Servicing Agent is so acting and certain other matters pertaining to the Fund;
assist shareholders in designating and changing dividend options, account
designations and addresses; provide necessary personnel and facilities to
establish and maintain shareholder accounts and records; assist in processing
purchase and redemption transactions; arrange for the wiring of funds; transmit
and receive funds in connection with customer orders to purchase or redeem
shares; verify and guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated accounts;
furnish (either separately or on an integrated basis with other reports sent to
a shareholder by a Shareholder Servicing Agent) quarterly and year-end
statements and confirmations of purchases and redemptions; transmit, on behalf
of the Fund, proxy statements, annual reports, updated prospectuses and other
communications to shareholders of the Fund; receive, tabulate and transmit to
the Fund proxies executed by shareholders with respect to meetings of
shareholders of the Fund; and provide such other related services as the Fund or
a shareholder may request. Shareholder servicing agents may be required to
register pursuant to state securities law.
Each Shareholder Servicing Agent may voluntarily agree from time to time
to waive a portion of the fees payable to it under its Servicing Agreement with
respect to each Fund on a month-to-month basis. For the fiscal period December
31, 1992 (commencement of operations) through October 31, 1993, and the fiscal
years ended October 31, 1994 and 1995, fees payable to the Shareholder Servicing
Agents and the amounts voluntarily waived for each such period (as indicated in
parentheses) were as follows:
12/31/92 --- Fiscal Year-Ended October 31, --
through 10/31/93 ------ 1994 ------ ------ 1995 ------
payable waived payable waived payable waived
--------- -------- --------- -------- --------- --------
Global Fixed
Income Fund:
Class A $2,246 ($2,246) $5,120 ($2,867) $4,583 ($2,070)
Class B n/a n/a $ 367 -- $887 --
International
Equity Fund:
Class A $9,683 ($9,683) $73,552 -- $75,631 --
Class B n/a n/a $ 8,284 -- $18,367 --
The Trust has also entered into a Transfer Agency Agreement with DST
Systems, Inc. ("DST") pursuant to which DST acts as transfer agent for the
Trust. DST's address is 210 West 10th Street, Kansas City, MO 64105.
Pursuant to a Custodian Agreement, Chase acts as the custodian of the
assets of each Fund and receives such compensation as is from time to time
agreed upon by the Trust and Chase. As custodian, Chase provides oversight and
record keeping for the assets held in the portfolios of each Fund. Chase also
provides fund accounting services for the income, expenses and shares
outstanding for such Funds. Chase is located at 3 Metrotech Center, Brooklyn, NY
11245. Investors Bank and Trust Co., One First Canadian Place, Toronto, Canada
5X1C8, provides similar services for the International Equity and Global Fixed
Income Portfolios.
38
<PAGE>
For the fiscal period December 31, 1992 (commencement of operations)
through October 31,1993, and the fiscal years ended October 31, 1994 and 1995,
the Transfer Agent was paid or accrued transfer agent fees with respect to the
Global Fixed Income Fund and International Equity Fund, and voluntarily waived
the amount in parentheses following such fees, as follows:
12/31/92 11/1/93 11/1/94
through through through
10/31/93 10/31/94 10/31/95
----------------- ------------------ ---------------------
Global Fixed
Income Fund: $25,068 ($24,867) $37,426 ($60,117) $57,001 ($76,547)
International
Equity Fund: $25,068 ($24,513) $173,457 ($118,713) $280,639 ($157,053)
INDEPENDENT ACCOUNTANTS
The financial statements incorporated herein by reference from the
Trust's Annual Reports to Shareholders for the fiscal year ended October 31,
1995, and the related financial highlights which appear in the Prospectuses,
have been incorporated herein and included in the Prospectuses in reliance on
the reports of Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New
York 10036, independent accountants of the Funds, given on the authority of said
firm as experts in accounting and auditing. Price Waterhouse LLP provides the
Funds with audit services, tax return preparation and assistance and
consultation with respect to the preparation of filings with the Securities and
Exchange Commission.
GENERAL INFORMATION
Description of Shares, Voting Rights and Liabilities
Mutual Fund Group is an open-end, non-diversified management investment
company organized as a Massachusetts business trust under the laws of the
Commonwealth of Massachusetts in 1987. Because the Trust is "non-diversified",
more than 5% of the assets of certain Funds may be invested in the obligations
of any single issuer, which may make the value of the shares in such a Fund more
susceptible to certain risks than shares of a diversified mutual fund.
The Trust currently consists of 16 series of shares of beneficial
interest, par value $.001 per share. With respect to certain Funds, the Trust
may offer more than one class of shares. The Trust has reserved the right to
create and issue additional series or classes. Each share of a series or class
represents an equal proportionate interest in that series or class with each
other share of that series or class. The shares of each series or class
participate equally in the earnings, dividends and assets of the particular
series or class. Expenses of the Trust which are not attributable to a specific
series or class are allocated among all the series in a manner believed by
management of the Trust to be fair and equitable. Shares have no preemptive or
conversion rights. Shares when issued are fully paid and non-assessable, except
as set forth below. Shareholders are entitled to one vote for each share held.
Shares of class generally vote together except when required under federal
securities laws to vote separately on matters that only affect a particular
class, such as the approval of distribution plans for a particular class. With
respect to shares purchased through a Shareholder Servicing Agent and, in the
event written proxy instructions are not received by a Fund or its designated
agent prior to a shareholder meeting at which a proxy is to be voted and the
shareholder does not attend the meeting in person, the Shareholder Servicing
Agent for such shareholder will be authorized pursuant to an applicable
agreement with the shareholder to vote the shareholder's outstanding shares in
the same proportion as the votes cast by other Fund shareholders represented at
the meeting in person or by proxy.
Certain Funds offer both Class A and Class B shares. The classes of
shares have several different attributes relating to sales charges and expenses,
as described herein and in the Prospectuses.
39
<PAGE>
In addition to such differences, expenses borne by each class may
differ slightly because of the allocation of other class-specific expenses. For
example, a higher transfer agency fee may be imposed on Class B shares than on
class A shares. The relative impact of initial sales charges, contingent
deferred sales charges, and ongoing annual expenses will depend on the length of
time a share is held.
Selected dealers and financial consultants may receive different levels
of compensation for selling one particular class of shares rather than another.
The Trust is not required to hold annual meetings of shareholders but
will hold special meetings of shareholders of a series or class when, in the
judgment of the Trustees, it is necessary or desirable to submit matters for a
shareholder vote. Shareholders have, under certain circumstances, the right to
communicate with other shareholders in connection with requesting a meeting of
shareholders for the purpose of removing one or more Trustees. Shareholders also
have, in certain circumstances, the right to remove one or more Trustees without
a meeting. No material amendment may be made to the Trust's Declaration of Trust
without the affirmative vote of the holders of a majority of the outstanding
shares of each series affected by the amendment. The Trust's Declaration of
Trust provides that, at any meeting of shareholders of the Trust or of any
series or class, a Shareholder Servicing Agent may vote any shares as to which
such Shareholder Servicing Agent is the agent of record and which are not
represented in person or by proxy at the meeting, proportionately in accordance
with the votes cast by holders of all shares of that series or class otherwise
represented at the meeting in person or by proxy as to which such Shareholder
Servicing Agent is the agent of record. Any shares so voted by a Shareholder
Servicing Agent will be deemed represented at the meeting for purposes of quorum
requirements. Shares have no preemptive or conversion rights. Shares, when
issued, are fully paid and non-assessable, except as set forth below. Any series
or class may be terminated (i) upon the merger or consolidation with, or the
sale or disposition of all or substantially all of its assets to, another
entity, if approved by the vote of the holders of two thirds of its outstanding
shares, except that if the Board of Trustees recommends such merger,
consolidation or sale or disposition of assets, the approval by vote of the
holders of a majority of the series' or class' outstanding shares will be
sufficient, or (ii) by the vote of the holders of a majority of its outstanding
shares, or (iii) by the Board of Trustees by written notice to the series' or
class' shareholders. Unless each series and class is so terminated, the Trust
will continue indefinitely.
Stock certificates are issued only upon the written request of a
shareholder, subject to the policies of the investor's Shareholder Servicing
Agent, but the Trust will not issue a stock certificate with respect to shares
that may be redeemed through expedited or automated procedures established by a
Shareholder Servicing Agent. No certificates are issued for Class B shares due
to their conversion feature.
Under Massachusetts law, shareholders of a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Trust and
provides for indemnification and reimbursement of expenses out of the Trust
property for any shareholder held personally liable for the obligations of the
Trust. The Trust's Declaration of Trust also provides that the Trust shall
maintain appropriate insurance (for example, fidelity bonding and errors and
omissions insurance) for the protection of the Trust, its shareholders,
Trustees, officers, employees and agents covering possible tort and other
liabilities. Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its obligations.
The Trust's Declaration of Trust further provides that obligations of
the Trust are not binding upon the Trustees individually but only upon the
property of the Trust and that the Trustees will not be liable for any action or
failure to act, errors of judgment or mistakes of fact or law, but nothing in
the Declaration of Trust protects a Trustee against any liability to which he
would otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
40
<PAGE>
The Board of Trustees has adopted a Code of Ethics addressing personal
securities transactions by investment personnel and access persons and other
related matters. The Code of Ethics substantially conforms to the
recommendations made by the Investment Company Institute ("ICI") (except where
noted) and includes such provisions as:
(bullet) Prohibitions on investment personnel acquiring securities in
initial offerings;
(bullet) A requirement that access persons obtain prior to acquiring
securities in a private placement and that the officer granting such
approval have no interest in the issuer making the private placement;
(bullet) A restriction on access persons executing transactions for
securities on a recommended list until 14 days after distribution of
that list;
(bullet) A prohibition on access persons acquiring securities that are
pending execution by one of the Fund or Portfolios until 7 days after
the transactions of the Fund or Portfolios are completed;
(bullet) A prohibition of any buy or sell transaction in a particular
security in a 30-day period, except as may be permitted in certain
hardship cases or exigent circumstances where prior approval is
obtained. This provision differs slightly from the ICI recommendation;
(bullet) A requirement for pre-clearance of any buy or sell transaction
in a particular security after 30 days, but within 60 days;
(bullet) A requirement that any gift exceeding $75.00 from a customer
must be reported to the appropriate compliance officer;
(bullet) A requirement that access persons submit in writing any
request to serve as a director or trustee of a publicly traded company;
(bullet) A requirement that all securities transactions in excess of
$1,000 be pre-cleared, except that if a person has engaged in more than
$10,000 of securities transactions in a calendar quarter all securities
of such person require pre-clearance (this de minimis exception differs
slightly from the ICI recommendations);
(bullet) A requirement that all access persons direct their
broker-dealer to submit duplicate confirmation and customer statements
to the appropriate compliance unit; and
(bullet) A requirement that all access persons sign a Code of Ethics
acknowledgment, affirming that they have read and understood the Code
and submit a personal security holdings report upon commencement of
employment or status and a personal security transaction report within
10 days of each calendar quarter thereafter.
Principal Holders
As of March 31, 1996 the following persons owned of record 5% or more
of the outstanding shares of the following Funds:
Vista Global Fixed Income Fund - A Shares
Cudd & Company 45.48%
CMB Mutual Funds Dept. 35th Floor
1211 6th Avenue
New York, NY 10036-8701
Cudd & Company 5.74%
Custody Division
1211 6th Avenue, 35th Floor
New York, NY 10036-8701
Barbara M. Martin 10.24%
David G. Martin JTWROS
7637 Chancellor Way
Springfield, VA 22153-2344
Vista Global Fixed Income Fund - B Shares
BHC Securities Inc. 11.62%
FAO 84403937
Attn: Mutual Funds
One Commerce Square
2005 Market Street Suite 1200
Philadelphia, PA 19103-7042
NFSC FEBO # CK7-640204 5.66%
NFSC/FMTC IRA
FBO ROSA CRESPO
2312 SW 128 Avenue
Miami, FL 33175-1940
Smith Barney Inc. 12.57%
00108962177
388 Greenwich Street
New York, NY 10013-2375
Vista International Equity Fund - A Shares
Liva & Company 5.07%
c/o Chase Manhattan Bank NA
Attn: Mutual FDS/T-C
PO Box 1412
Rochester, NY 14603-1412
Cudd & Company 11.86%
Custody Division
1211 6th Avenue 35th Floor
New York, NY 10036-8701
Vista Japan Fund - A Shares
Cudd & Company 21.47%
Custody Division
1211 6th Avenue 35th Floor
New York, NY 10036-8701
Cudd & Company 5.07%
Custody Division
1211 6th Avenue 35th Floor
New York, NY 10036-8701
Cudd & Company 63.08%
Custody Division
1211 6th Avenue 35th Floor
New York, NY 10036-8701
Vista Japan Fund - B Shares
Randall J. Dekker TTEE 5.52%
Randall J. Dekker PSP
5100 N. Brookline Avenue #790
Oklahoma City, OK 73112-3603
BHC Securities Inc. 6.29%
FAO 84900540
Attn: Mutual Funds Dept.
One Commerce Square
2005 Market Street Suite 1200
Philadelphia, PA 19103-7042
BHC Securities Inc. 22.44%
FAO 84305649
Attn: Mutual Funds Dept.
One Commerce Square
2005 Market Street 1200
Philadelphia, PA 19103-7042
BHC Securities Inc. 11.30%
FAO 84422511
Attn: Mutual Funds Dept.
One Commerce Square
2005 Market Street Suite 1200
Philadelphia, PA 19103-7042
BHC Securities Inc. 9.07%
FAO 84001983
Attn: Mutual Funds Dept.
One Commerce Square
2005 Market Street Suite 1200
Philadelphia, PA 19103-7042
BHC Securities Inc. 5.63%
FAO 84449445
Attn: Mutual Funds Dept.
One Commerce Square
2005 Market Street Suite 1200
Philadelphia, PA 19103-7042
Chase Manhattan Bank Cust 11.37%
FBO Michael F. Glennie
Keogh PS
1298 Cocoanut Road
Boca Raton, FL 33432-7710
Chase Manhattan Bank Cust 11.38%
FBO Dianne F. Glennie
Keogh PS
1298 Cocoanut Road
Boca Raton, FL 33432-7710
Vista Southeast Asian Fund - A Shares
Cudd & Company 27.34%
Custody Division
1211 6th Avenue 35th Floor
New York, NY 10036-8701
Cudd & Company 5.97%
Custody Division
1211 6th Avenue 35th Floor
New York, NY 10036-8701
Cudd & Company 42.97%
Custody Division
1211 6th Avenue 35th Floor
New York, NY 10036-8701
Vista Southeast Asian Fund - B Shares
Resources Trust Co. Tr 9.94%
U/A DTD Feb 02 95
FBO Bert A. Smith IRA
1572349789
PO Box 5900
Denver, CO 80217-5900
IFTC Cust IRA A/C 7.32%
Eric Getson
1713 Independence Lane
Cherry Hill, NJ 08003-3223
Vista European Fund - A Shares
Cudd & Company 31.52%
Custody Division
1211 6th Avenue 35th Floor
New York, NY 10036-8701
Cudd & Company 60.26%
Custody Division
1211 6th Avenue 35th Floor
New York, NY 10036-8701
Vista European Fund - B Shares
Frank H. Lipowitz 5.34%
67 Walzer Road
Rochester, NY 14622-2501
IFTC Cust IRA R/O 31.17%
Henderson Cole
122 W. King Street
Danbury, CT 06811
Chase Manhattan Bank Cust 8.22%
FBO Antoinette Scurti
Keogh PS
200 East 27th Street
New York, NY 10016-9202
Chase Manhattan Bank Cust 21.37%
FBO Michael F. Glennie
Keogh PS
1298 Cocoanut Road
Boca Raton, FL 33432-7710
Chase Manhattan Bank Cust 21.37%
FBO Dianne F. Glennie
Keogh PS
1298 Cocoanut Road
Boca Raton, FL 33432-7710
41
<PAGE>
Financial Statements
The 1995 Annual Report to Shareholders of each Fund, including the
reports of independent accountants, financial highlights and financial
statements for the fiscal year ended October 31, 1995 contained therein, are
incorporated herein by reference.
Specimen Computations of Offering Prices Per Share
The International Equity Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share
of Beneficial Interest at October 31, 1995 ........................... $12.02
Maximum Offering Price per Share ($10.60 divided by .9525) ............ $12.62
(reduced on purchases of $100,000 or more)
B Shares:
Net Asset Value and Redemption Price per Share
of Beneficial Interest at October 31, 1995 ........................... $11.89
The Global Fixed Income Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share
of Beneficial Interest at October 31, 1995 ........................... $10.65
Maximum Offering Price per Share ($30.26 divided by .955)
(reduced on purchases of $100,000 or more) ........................... $11.15
B Shares:
Net Asset Value and Redemption Price per Share
of Beneficial Interest at October 31, 1995 ........................... $10.63
The European Fund, Japan Fund and Southeast Asian Fund commenced offering of
Shares on November 1, 1995.
42
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APPENDIX A
DESCRIPTION OF CERTAIN OBLIGATIONS
ISSUED OR GUARANTEED BY U.S. GOVERNMENT
AGENCIES OR INSTRUMENTALITIES
Federal Farm Credit System Notes and Bonds -- are bonds issued by a
cooperatively owned nationwide system of banks and associations supervised by
the Farm Credit Administration, an independent agency of the U.S. Government.
These bonds are not guaranteed by the U.S. Government.
Maritime Administration Bonds -- are bonds issued and provided by the
Department of Transportation of the U.S. Government and are guaranteed by the
U.S. Government.
FNMA Bonds -- are bonds guaranteed by the Federal National Mortgage
Association. These bonds are not guaranteed by the U.S. Government.
FHA Debentures -- are debentures issued by the Federal Housing
Administration of the U.S. Government and are guaranteed by the U.S. Government.
FHA Insured Notes -- are bonds issued by the Farmers Home Administration,
the U.S. Government and are guaranteed by the U.S. Government.
GNMA Certificates -- are mortgage-backed securities which represent a
partial ownership interest in a pool of mortgage loans issued by lenders such as
mortgage bankers, commercial banks and savings and loan associations. Each
mortgage loan included in the pool is either insured by the Federal Housing
Administration or guaranteed by the Veterans Administration and therefore
guaranteed by the U.S. Government. As a consequence of the fees Paid to GNMA and
the issuer of GNMA Certificates, the coupon rate of interest of GNMA
Certificates is lower than the interest paid on the VA-guaranteed or FHA-insured
mortgages underlying the Certificates. The average life of a GNMA Certificate is
likely to be substantially less than the original maturity of the mortgage pools
underlying the securities. Prepayments of principal by mortgagors and mortgage
foreclosures may result in the return of the greater part of principal invested
far in advance of the maturity of the mortgages in the pool. Foreclosures impose
no risk to principal investment because of the GNMA guarantee. As the prepayment
rate of individual mortgage pools will vary widely, it is not possible to
accurately predict the average life of a particular issue of GNMA Certificates.
The yield which will be earned on GNMA Certificates may vary from their coupon
rates for the following reasons: (i) Certificates may be issued at a premium or
discount, rather than at par; (ii) Certificates may trade in the secondary
market at a premium or discount after issuance; (iii) interest is earned and
compounded monthly which has the effect of raising the effective yield earned on
the Certificates; and (iv) the actual yield of each Certificate is affected by
the prepayment of mortgages included in the mortgage pool underlying the
Certificates. Principal which is so prepaid will be reinvested although possibly
at a lower rate. In addition, prepayment of mortgages included in the mortgage
pool underlying a GNMA Certificate purchased at a premium could result in a loss
to a Fund. Due to the large amount of GNMA Certificates outstanding and active
participation in the secondary market by securities dealers and investors, GNMA
Certificates are highly liquid instruments. Prices of GNMA Certificates are
readily available from securities dealers and depend on, among other things, the
level of market rates, the Certificate's coupon rate and the prepayment
experience of the pool of mortgages backing each Certificate. If agency
securities are purchased at a premium above principal, the premium is not
guaranteed by the issuing agency and a decline in the market value to par may
result in a loss of the premium, which may be particularly likely in the event
of a prepayment. When and if available, U.S. Government obligations may be
purchased at a discount from face value.
GNMA FHLMC Bonds and GNMA FNMA Bonds -- are mortgage-backed bonds issued by
the Federal Home Loan Mortgage Corporation and the Federal National Mortgage
Association, respectively, and are guaranteed by the U.S. Government.
GSA Participation Certificates -- are participation certificates issued by
the General Services Administration of the U.S. Government and are guaranteed by
the U.S. Government.
New Communities Debentures -- are debentures issued in accordance with the
provisions of Title IV of the Housing and Urban Development Act of 1968, as
supplemented and extended by Title VII of the Housing and Urban Development Act
of 1970, the payment of which is guaranteed by the U.S. Government.
Public Housing Bonds -- are bonds issued by public housing and urban
renewal agencies in connection with programs administered by the Department of
Housing and Urban Development of the U.S. Government, the payment of which is
secured by the U.S. Government.
Penn Central Transportation Certificates -- are certificates issued by Penn
Central Transportation and guaranteed by the U.S. Government.
SBA Debentures -- are debentures fully guaranteed as to principal and
interest by the Small Business Administration of the U.S. Government.
Washington Metropolitan Area Transit Authority Bonds -- are bonds issued by
the Washington Metropolitan Area Transit Authority and are guaranteed by the
U.S. Government.
FHLMC Bonds -- are bonds issued and guaranteed by the Federal Home Loan
Mortgage Corporation. These bonds are not guaranteed by the U.S. Government.
Federal Home Loan Bank Notes and Bonds -- are notes and bonds issued by the
Federal Home Loan Bank System and are not guaranteed by the U.S. Government.
Student Loan Marketing Association ("Sallie Mae") Notes and bonds -- are
notes and bonds issued by the Student Loan Marketing Association and are not
guaranteed by the U.S. Government.
D.C. Armory Board Bonds -- are bonds issued by the District of Columbia
Armory Board and are guaranteed by the U.S. Government.
Export-Import Bank Certificates -- are certificates of beneficial interest
and participation certificates issued and guaranteed by the Export-Import Bank
of the U.S. and are guaranteed by the U.S. Government.
In the case of securities not backed by the "full faith and credit" of the
U.S. Government, the investor must look principally to the agency issuing or
guaranteeing the obligation for ultimate repayment, and may not be able to
assert a claim against the U.S. Government itself in the event the agency or
instrumentality does not meet its commitments.
Investments may also be made in obligations of U.S. Government agencies or
instrumentalities other than those listed above.
A-1
<PAGE>
APPENDIX B
DESCRIPTION OF RATINGS
A description of the rating policies of Moody's, S&P and Fitch with respect to
bonds and commercial paper appears below.
Moody's Investors Service's Corporate Bond Ratings
Aaa--Bonds which are rated "Aaa" are judged to be of the best quality and carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa--Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated "A" possess many favorable investment qualities and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated "Baa" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated "Ba" are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguared
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated "B" generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance and
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated "Caa" are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated "Ca" represent obligations which are speculative in
high degree.
B-1
<PAGE>
Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated "C" are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numercal modifiers "1", "2", and "3" to certain of its rating
classifications. The modifier "1" indicates that the security ranks in the
higher end of its generic rating category; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates that the issue ranks in the
lower end of its generic rating category.
Standard & Poor's Ratings Group Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to repay principal and pay
interest.
AA--Bonds rated "AA" also qualify as high quality debt obligations. Capacity to
pay principal and interest is very strong, and differs from "AAA" issues only in
small degree.
A--Bonds rated "A" have a strong capacity to repay principal and pay interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Bonds rated "BBB" are regarded as having an adequate capacity to repay
principal and pay interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to repay principal and pay interest for
bonds in this category than for higher rated categories.
BB-B-CCC-CC-C--Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the
obligations. BB indicates the lowest degree of speculation and C the highest
degree of speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.
CI--Bonds rated "CI" are income bonds on which no interest is being paid.
D--Bonds rated "D" are in default. The "D" category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired unless S&P believes that such payments
will be made during such grace period. The "D" rating is also used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
The ratings set forth above may be modified by the addition of a plus or minus
to show relative standing within the major rating categories.
Moody's Investors Service's Commercial Paper Ratings
B-2
<PAGE>
Prime-1--Issuers (or related supporting institutions) rated "Prime-1" have a
superior ability for repayment of senior short-term debt obligations. "Prime-1"
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries, high
rates of return on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and
well-established access to a range of financial markets and assured sources of
alternate liquidity.
Prime-2--Issuers (or related supporting institutions) rated "Prime-2" have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternative liquidity is maintained.
Prime-3--Issuers (or related supporting institutions) rated "Prime-3" have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and the requirement for relatively high financial
leverage. Adequate alternate liquidity is maintained.
Not Prime--Issuers rated "Not Prime" do not fall within any of the Prime rating
categories.
Standard & Poor's Ratings Group Commercial Paper Ratings
A S&P commercial paper rating is current assessment of the likelihood of timely
payment of debt having an original maturity of no more than 365 days. Ratings
are graded in several categories, ranging from "A-1" for the highest quality
obligations to "D" for the lowest. The four categories are as follows:
A-1--This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".
A-3--Issues carrying this designation have adequate capacity for timely payment.
They are, however, somewhat more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higger designations.
B--Issues rated "B" are regarded as having only speculative capacity for timely
payment.
C--This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D--Debt rated "D" is in payment default. The "D" rating category is used when
interest
B-3
<PAGE>
payments or principal payments are not made on the date due, even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period.
Fitch Bond Ratings
AAA--Bonds rated AAA by Fitch are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA--Bonds rated AA by Fitch are considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issues is generally
rated F-1+ by Fitch
A--Bonds rated A by Fitch are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB--Bonds rated BBB by Fitch are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse consequences on
these bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for bonds
with higher ratings.
Plus and minus signs are used by Fitch to indicate the relative position of a
credit within a rating category. Plus and minus signs, however, are not used in
the AAA category.
Fitch Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
Fitch's short-term ratings are as follows:
F-1+--Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.
F-1--Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.
B-4
<PAGE>
F-2--Issues assigned this rating have a satisfactory degree of assurance for
timely payment but the margin of safety is not as great as for issues assigned
F-1+ and F-1 ratings.
F-3--Issues assigned this rating have characteristics suggesting that the degree
of assurance for timely payment is adequate, although near-term adverse changes
could cause these securities to be rated below investment grade.
LOC--The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.
Like higher rated bonds, bonds rated in the Baa or BBB categories are considered
to have adequate capacity to pay principal and interest. However, such bonds may
have speculative characteristics, and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case with higher grade bonds.
After purchase by a Fund, a security may cease to be rated or its rating may be
reduced below the minimum required for purchase by such Fund. Neither event will
require a sale of such security by a Fund. However, a Fund's investment manager
will consider such event in its determination of whether such Fund should
continue to hold the security. To the extent the ratings given by Moody's, S&P
or Fitch may change as a result of changes in such organizations or their rating
systems, a Fund will attempt to use comparable ratings as standards for
investments in accordance with the investment policies contained in this
Prospectus and in the Statement of Additional Information.
B-5
<PAGE>
PART C
<PAGE>
MUTUAL FUND GROUP
PART C. OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial statements
In Part A: Financial Highlights
In Part B: Financial Statements and the Reports thereon
for the Funds filed herein, other than Vista
U.S. Government Securities Fund and Vista
American Value Fund, for the fiscal year ended
October 31, 1995 are incorporated by reference
into Part B as part of the 1995 Annual Reports
to Shareholders for such Funds as filed with
the Securities and Exchange Commission by
Mutual Fund Group on Form N-30D on December
29, 1995, accession number 0000950123-95-
003915, which are incorporated into Part B by
reference. Financial Statements and the
Reports thereon for The Hanover U.S.
Government Securities Fund and The Hanover
American Value Fund, each a series of The
Hanover Investment Funds, Inc., for the fiscal
year ended November 30, 1995 are incorporated
by reference into Part B as part of the 1995
Annual Reports to Shareholders for such funds
as filed with the Securities and Exchange
Commission by The Hanover Investment Funds,
Inc. on Form N-30D on February 5, 1996,
accession number 0000950123-96-000348, which
are incorporated into Part B by reference.
In Part C: None.
(b) Exhibits:
Exhibit
Number
- -------
1(a) Declaration of Trust, as amended. (1)
1(b) Certificate of Amendment to Declaration of Trust dated December 14,
1995.(12)
1(c) Certificate of Amendment to Declaration of Trust dated October 19,
1995.(12)
1(d) Certificate of Amendment to Declaration of Trust dated July 25,
1993.(12)
2 By-laws, as amended. (1)
3 None.
4 Specimen share certificate. (1)
5(a) Investment Advisory Agreements and Sub-Advisory Agreements(6)
5(b) Form of Investment Advisory Agreement for Vista Small Cap Equity
Fund. (9)
5(c) Administration Agreement.(6)
5(d) Form of Interim Investment Advisory Agreement.(12)
5(e) Form of Proposed Investment Advisory Agreement.(12)
5(f) Form of Proposed Sub-Advisory Agreement between The Chase Manhattan
Bank and Chase Asset Management, Inc.(12)
5(g) Form of Administration Agreement.(12)
5(h) Form of Proposed Investment Subadvisory Agreement between The Chase
Manhattan Bank and [Chase Asset Management, Inc./Van Deventer &
Hoch(12)].
6(a) Distribution and Sub-Administration Agreement.(6)
6(b) Distribution and Sub-Administration Agreement dated August 21,
1995.(12)
7(a) Retirement Plan for Eligible Trustees.(12)
7(b) Deferred Compensation Plan for Eligible Trustees.(12)
8(a) Custodian Agreement. (1)
8(b) Sub-Custodian Agreement. (1)
9(a) Transfer Agency Agreement. (1)
9(b) Administrative Services Plan. (1)
9(c) Shareholder Servicing Agreement of Vista Mutual Funds. (1)
9(d) Form of Shareholder Servicing Agreement of Vista Premier Funds.(1)
9(e) Form of Shareholder Servicing Agreement. (12)
C-1
<PAGE>
9(f) Agreement and Plan of Reorganization and Liquidation.(12)
10 Opinion re: Legality of Securities being Registered.(1)
11(a) Consent of Price Waterhouse LLP.(13)
11(b) Consent of KPMG Peat Marwick LLP.(13)
12 None.
13 Not Applicable.
14 None.
15(a) Rule 12b-1 Distribution Plan of Vista Mutual Funds including
Selected Dealer Agreement and Shareholder Service Agreement. (1)
15(b) Rule 12b-1 Distribution Plan of Vista Premier Funds including
Selected Dealer Agreement and Shareholder Service Agreement. (1)
15(c) Rule 12b-1 Distribution Plan for each of Vista Bond Fund, Vista
Short-Term Bond Fund, Vista Equity Fund and Vista U.S. Government
Money Market Fund including Selected Dealer Agreement and
Shareholder Service Agreement.(3)
15(d) Form of Rule 12b-1 Distribution Plan for Class B shares of the Vista
Prime Money Market Fund.(8)
15(e) Form of Rule 12b-1 Distribution Plan for Vista Asian Oceanic Shares
Fund, Vista Japan Pacific Shares Fund, Vista U.S. Government
Securities Fund and Vista European Shares Fund.(8)
15(f) Form of Rule 12b-1 Distribution Plan for Vista Small Cap Equity
Fund.(9)
15(g) Proposed Rule 12b-1 Distribution Plan - Class A Shares - Vista
American Value Fund (including forms of Selected Dealer Agreement
and Shareholder Servicing Agreement).(12)
15(h) Rule 12b-1 Distribution Plan - Class B Shares (including forms of
Selected Dealer Agreement and Shareholder Servicing Agreement).(12)
16 Schedule for Computation for Each Performance Quotation.(11)
17 Financial Data Schedule.(13)
18 Form of Rule 18f-3 Multi-Class Plan.(12)
- --------------------
(1) Filed as an exhibit to Amendment No. 6 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) as filed with the
Securities and Exchange Commission on March 23, 1990.
(2) Filed as an exhibit to Amendment No. 11 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) as filed with the
Securities and Exchange Commission on June 8, 1992 to register shares of
the Vista Balanced Fund and IEEE Spectrum Fund series of the Trust.
(3) Filed as an exhibit to Amendment No. 15 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) as filed with the
Securities and Exchange Commission on October 30, 1992.
(4) Filed as an exhibit to Amendment No. 16 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on December 28, 1992.
(5) Filed as an exhibit to Amendment No. 19 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on June 30, 1993.
(6) Filed as an exhibit to Amendment No. 23 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on December 30, 1993.
(7) Filed as an exhibit to Amendment No. 24 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on February 10, 1994.
(8) Filed as an Exhibit to Amendment No. 26 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on June 30, 1994.
(9) Filed as an Exhibit to Amendment No. 27 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on October 3, 1994.
(10) Filed as an Exhibit to Amendment No. 30 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on July 19, 1995.
(11) Filed as an Exhibit to Amendment No. 31 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on November 13, 1995.
(12) Filed as an Exhibit to Amendment No. 32 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on December 28, 1995.
(13) Filed herewith.
ITEM 25. Persons Controlled by or Under Common
Control with Registrant
Not applicable
C-2
<PAGE>
ITEM 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Record
Title of Series Holders as of January 31, 1996
--------------- ------------------------------
A B Institutional
Shares Shares Shares
<S> <C> <C> <C>
VISTA(SM) U.S. Treasury Income Fund 2,783 726 N/A
VISTA(SM) Growth and Income Fund 76,565 20,969 5
VISTA(SM) Capital Growth Fund 38,185 22,565 5
VISTA(SM) Balanced Fund 1,274 609 N/A
VISTA(SM) Large Cap Equity Fund 87 N/A N/A
VISTA(SM) Bond Fund 74 N/A N/A
VISTA(SM) Short-Term Bond Fund 69 N/A N/A
VISTA(SM) Global Fixed Income Fund 157 59 N/A
VISTA(SM) International Equity Fund 2,598 1,111 N/A
VISTA(SM) Equity Income Fund 631 N/A N/A
IEEE Balanced Fund 452 N/A N/A
VISTA(SM) Southeast Asian Fund 117 31 N/A
VISTA(SM) Japan Fund 54 12 N/A
VISTA(SM) European Fund 34 9 N/A
VISTA(SM) Small Cap Equity Fund 3,459 2,851 N/A
VISTA(SM) U.S. Government Securities Fund 0 N/A 0
VISTA(SM) American Value Fund 0 N/A N/A
</TABLE>
ITEM 27. Indemnification
Reference is hereby made to Article V of the Registrant's Declaration
of Trust.
The Trustees and officers of the Registrant and the personnel of the
Registrant's investment adviser, administrator and distributor are insured under
an errors and omissions liability insurance policy. The Registrant and its
officers are also insured under the fidelity bond required by Rule 17g-1 under
the Investment Company Act of 1940.
Under the terms of the Registrant's Declaration of Trust, the Registrant may
indemnify any person who was or is a Trustee, officer or employee of the
Registrant to the maximum extent permitted by law; provided, however, that any
such indemnification (unless ordered by a court) shall be made by the Registrant
only as authorized in the specific case upon a determination that
indemnification of such persons is proper in the circumstances. Such
determination shall be made (i) by the Trustees, by a majority vote of a quorum
which consists of Trustees who are neither in Section 2(a)(19) of the Investment
Company Act of 1940, nor parties to the proceeding, or (ii) if the required
quorum is not obtainable or, if a quorum of such Trustees so directs, by
independent legal counsel in a written opinion. No indemnification will be
provided by the Registrant to any Trustee or officer of the Registrant for any
liability to the Registrant or shareholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of duty.
Insofar as the conditional advancing of indemnification monies for actions based
upon the Investment Company Act of 1940 may be concerned, such payments will be
made only on the following conditions: (i) the advances must be limited to
amounts used, or to be used, for the preparation or presentation of a defense to
the action, including costs connected with the preparation of a settlement; (ii)
advances may be made only upon receipt of a written promise by, or on behalf of,
the recipient to repay that amount of the advance which exceeds that amount to
which it is ultimately determined that he is entitled to receive from the
Registrant by reason of indemnification; and (iii) (a) such promise must be
secured by a surety bond, other suitable
C-3
<PAGE>
insurance or an equivalent form of security which assures that any repayments
may be obtained by the Registrant without delay or litigation, which bond,
insurance or other form of security must be provided by the recipient of the
advance, or (b) a majority of a quorum of the Registrant's disinterested,
non-party Trustees, or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts, that the recipient of
the advance ultimately will be found entitled to indemnification.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of it counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 28. Business and Other Connections of Investment Adviser
The Chase Manhattan Bank, N.A. (the "Adviser") is a commercial bank
providing a wide range of banking and investment services.
To the knowledge of the Registrant, none of the Directors or executive
officers of the Adviser, except those described below, are or have been, at any
time during the past two years, engaged in any other business, profession,
vocation or employment of a substantial nature, except that certain Directors
and executive officers of the Adviser also hold or have held various positions
with bank and non-bank affiliates of the Adviser, including its parent, The
Chase Manhattan Corporation. Each Director listed below is also a Director of
The Chase Manhattan Corporation.
<TABLE>
<CAPTION>
Principal Occupation or Other
Position with Employment of a Substantial
Name the Adviser Nature During Past Two Years
- ---- ----------- ----------------------------
<S> <C> <C>
Thomas G. Labreque Chairman of the Board, Chairman, Chief Executive Officer
and Director and a Director of The Chase
Manhattan Corporation and a
Director of AMAX, Inc.
Richard J. Boyle Vice Chairman of the Vice Chairman of the Board and a
Board and Director Director of The Chase Manhattan
Corporation and Trustee of
Prudential Realty Trust
M. Anthony Burns Director Chairman of the Board, President
and Chief Executive Officer of
Ryder System, Inc.
Joan Ganz Cooney Director Chairman of the Executive
Committee of the Board of Trustees,
formerly Chief Executive Officer of
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Children's Television Workshop and
a Director of each of Johnson &
Johnson, Metropolitan Life
Insurance Company and Xerox
Corporation
Edward S. Finkelstein Director Retired Chairman and Chief
Executive Officer and Director of
R.H. Macy & Co., Inc. and a
Director of Time Warner Inc.
H. Laurance Fuller Director Chairman, President, Chief
Executive Officer and Director of
Amoco Corporation and Director of
Abbott Laboratories
Howard C. Kauffman Director Retired President of Exxon
Corporation and a Director of each
of Pfizer Inc. and Ryder System,
Inc.
Paul W. MacAvoy Director Dean of Yale School of
Organization and Management
David T. McLaughlin Director President and Chief Executive
Officer of The Aspen Institute,
Chairman of Standard Fuse
Corporation and a Director of each
of ARCO Chemical Company and
Westinghouse Electric Corporation
Edmund T. Pratt, Jr. Director Chairman Emeritus, formerly
Chairman and Chief Executive
Officer, of Pfizer Inc. and a
Director of each of Pfizer, Inc.,
Celgene Corp., General Motors
Corporation and International Paper
Company
Henry B. Schacht Director Chairman and Chief Executive
Officer of Cummins Engine
Company, Inc. and a Director of
each of American Telephone and
Telegraph Company and CBS Inc.
Jairo A. Estrada Director Chairman of the Board and Chief
Executive Officer of Garden Way
Incorporated
Donald H. Trautlein Director President and Chief Executive
Officer of The Aspen Institute,
Chairman of Standard Fuse
Corporation and a Director of each
of ARCO Chemical Company and
Westinghouse Electric Corporation
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Kay R. Whitmore Director Chairman of the Board, President
and Chief Executive Officer and
Director of Eastman Kodak
Company
James L. Ferguson Director Retired Chairman and Chief
Executive Officer of General Foods
Corporation
William H. Gray III Director President and Chief Executive
Officer of the United Negro College
Fund, Inc
David T. Kearns Director Retired Chairman and Chief
Executive Officer of the Xerox
Corporation
Delano E. Lewis Director President and Chief Executive
Officer of National Public Radio
John H. McArthur Director Dean of the Harvard Graduate
School of Business Administration
</TABLE>
ITEM 29. Principal Underwriters
(a) Vista Fund Distributors, Inc., a wholly-owned subsidiary of
The BISYS Group, Inc. is the underwriter for the Registrant.
(b) The following are the Directors and officers of Vista Fund
Distributors, Inc. The principal business address of each of these persons, with
the exception of Mr. Spicer, is 101 Park Avenue, New York, New York 10178. The
principal business address of Mr. Spicer is One Bush Street, San Francisco,
California 94104.
<TABLE>
<CAPTION>
Position and Offices Position and Offices
Name with Distributor with the Registrant
- ---- -------------------- --------------------
<S> <C> <C>
William B. Blundin Director and Chief Executive Officer None
Richard E. Stierwalt Director and Chief Operating Officer None
Timothy M. Spicer Director and Chairman of the Board None
Joseph Kissel President None
George Martinez Chief Compliance Officer Secretary and Assistant
and Secretary Treasurer
</TABLE>
(c) Not applicable
C-6
<PAGE>
ITEM 30. Location of Accounts and Records
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:
Name Address
---- -------
Vista Fund Distributors, Inc. 101 Park Avenue,
New York, NY 10178
DST Systems, Inc. 210 W. 10th Street,
Kansas City, MO 64105
The Chase Manhattan Bank 270 Park Avenue,
New York, NY 10017
Chase Asset Mangement, Inc. 1211 Avenue of the
Americas,
New York, NY 10036
Van Deventer & Hoch 800 North Brand Boulevard,
300 Glendale, CA 91203
The Chase Manhattan Bank One Chase Square,
Rochester, NY 14363
ITEM 31. Management Services
Not applicable
ITEM 32. Undertakings
(1) Registrant undertakes that its trustees shall promptly
call a meeting of shareholders of the Trust for the purpose of voting upon the
question of removal of any such trustee or trustees when requested in writing so
to do by the record holders of not less than 10 per centum of the outstanding
shares of the Trust. In addition, the Registrant shall, in certain
circumstances, give such shareholders assistance in communicating with other
shareholders of a fund as required by Section 16(c) of the Investment Company
Act of 1940.
(2) The Registrant, on behalf of the Funds, undertakes,
provided the information required by Item 5A is contained in the latest annual
report to shareholders, to furnish to each person to whom a prospectus has been
delivered, upon their request and without charge, a copy of the Registrant's
latest annual report to shareholders.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has certified that it meets all of the
requirements for effectiveness of the Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment to its Registration Statement on Form N-1A to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York and the
State of New York on the 18th day of April, 1996.
MUTUAL FUND GROUP
By /s/ H. Richard Vartabedian
--------------------------
H. Richard Vartabedian
President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
/s/ Fergus Reid, III Chairman and Trustee April 18, 1996
- ------------------------------
Fergus Reid, III
/s/ William J. Armstrong Trustee April 18, 1996
- ------------------------------
William J. Armstrong
/s/ John R.H. Blum Trustee April 18, 1996
- ------------------------------
John R.H. Blum
/s/ Joseph J. Harkins Trustee April 18, 1996
- ------------------------------
Joseph J. Harkins
/s/ Richard E. Ten Haken Trustee April 18, 1996
- ------------------------------
Richard E. Ten Haken
/s/ Stuart W. Cragin, Jr. Trustee April 18, 1996
- ------------------------------
Stuart W. Cragin, Jr.
/s/ Irv Thode Trustee April 18, 1996
- ------------------------------
Irv Thode
/s/ H. Richard Vartabedian President April 18, 1996
- ------------------------------ and Trustee
H. Richard Vartabedian
/s/ Martin R. Dean Treasurer and April 18, 1996
- ------------------------------ Principal Financial
Martin R. Dean Officer
C-8
<PAGE>
SIGNATURES
International Equity Portfolio has duly caused this Post-Effective Amendment to
the Registration Statement on Form N-1A of Mutual Fund Group to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
on the 18th day of April, 1996.
INTERNATIONAL EQUITY PORTFOLIO
/s/ H. Richard Vartabedian
----------------------------------
H. Richard Vartabedian
Chairman
This amendment to the Registration Statement on Form N-1A of Mutual Fund Group
has been signed below by the following persons in the capacities and on the
dates indicated.
Signatures Title Date
---------- ----- ----
/s/ H. Richard Vartabedian Chairman April 18, 1996
- ------------------------------ and Trustee
H. Richard Vartabedian
/s/ Stuart W. Cragin, Jr. Trustee April 18, 1996
- ------------------------------
Stuart W. Cragin, Jr.
/s/ Fergus Reid, III Trustee April 18, 1996
- ------------------------------
Fergus Reid, III
/s/ Irving L. Thode Trustee April 18, 1996
- ------------------------------
Irving L. Thode
/s/ William J. Armstrong Trustee April 18, 1996
- ------------------------------
William J. Armstrong
C-9
<PAGE>
SIGNATURES
Capital Growth Portfolio has duly caused this Post-Effective Amendment to the
Registration Statement on Form N-1A of Mutual Fund Group to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
on the 18th day of April, 1996.
CAPITAL GROWTH PORTFOLIO
/s/ H. Richard Vartabedian
-----------------------------
H. Richard Vartabedian
Chairman
This Post-Effective Amendment to the Registration Statement on Form N-1A of
Mutual Fund Group has been signed below by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
/s/ H. Richard Vartabedian Chairman April 18, 1996
- ---------------------------- and Trustee
H. Richard Vartabedian
/s/ Stuart W. Cragin Trustee April 18, 1996
- ------------------------------
Stuart W. Cragin, Jr.
/s/ Fergus Reid, III Trustee April 18, 1996
- ------------------------------
Fergus Reid, III
/s/ Irving L. Thode Trustee April 18, 1996
- ------------------------------
Irving L. Thode
/s/ Joseph J. Harkins Trustee April 18, 1996
- ------------------------------
Joseph J. Harkins
C-10
<PAGE>
SIGNATURES
Global Fixed Income Portfolio has duly caused this Post-Effective Amendment to
the Registration Statement on Form N-1A of Mutual Fund Group to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
on the 18th day of April, 1996.
GLOBAL FIXED INCOME PORTFOLIO
/s/ H. Richard Vartabedian
-------------------------------
H. Richard Vartabedian
Chairman
This Post-Effective Amendment to the Registration Statement on Form N-1A of
Mutual Fund Group has been signed below by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
/s/ H. Richard Vartabedian Chairman April 18, 1996
- ---------------------------- and Trustee
H. Richard Vartabedian
/s/ Stuart W. Cragin, Jr. Trustee April 18, 1996
- ----------------------------
Stuart W. Cragin, Jr.
/s/ Fergus Reid, III Trustee April 18, 1996
- ----------------------------
Fergus Reid, III
/s/ Irving L. Thode Trustee April 18, 1996
- ----------------------------
Irving L. Thode
/s/ John R. H. Blum Trustee April 18, 1996
- ----------------------------
John R. H. Blum
C-11
<PAGE>
SIGNATURES
Growth and Income Portfolio has duly caused this Post-Effective Amendment to the
Registration Statement of Mutual Fund Group to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, on the 18th day
of April, 1996.
GROWTH AND INCOME PORTFOLIO
/s/ H. Richard Vartabedian
------------------------------
H. Richard Vartabedian
Chairman
This Post-Effective Amendment to the Registration Statement on Form N-1A of
Mutual Fund Group has been signed below by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
/s/ H. Richard Vartabedian Chairman April 18, 1996
- ------------------------------ and Trustee
H. Richard Vartabedian
/s/ Stuart W. Cragin, Jr. Trustee April 18, 1996
- ------------------------------
Stuart W. Cragin, Jr.
/s/ Fergus Reid, III Trustee April 18, 1996
- ------------------------------
Fergus Reid, III
/s/ Irving L. Thode Trustee April 18, 1996
- ------------------------------
Irving L. Thode
/s/ Richard E. Ten Haken Trustee April 18, 1996
- ---------------------------
Richard E. Ten Haken
C-12
<PAGE>
EXHIBIT INDEX
Exhibit
Number
- -------
11(a) Consent of Price Waterhouse LLP.
11(b) Consent of KPMG Peat Marwick LLP.
17 Financial Data Schedule (filed as Exhibit 27 in Edgar)
C-13
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectuses and
Statements of Additional Information constituting parts of this Post-Effective
Amendment No. 35 to the registration statement on Form N-1A (the "Registration
Statement") of our reports dated December 11, 1995 and December 15, 1995,
relating to the financial statements and selected per share data and ratios for
a share of beneficial interest outstanding appearing in the October 31, 1995
Annual Reports to Shareholders ("Annual Reports") of Vista U.S. Government
Income Fund (subsequently renamed Vista U.S. Treasury Income Fund), Vista
Balanced Fund, Vista Equity Income Fund, Vista Equity Fund (subsequently
renamed Vista Large Cap Equity Fund), Vista Bond Fund, Vista Short-Term Bond
Fund, Vista Small Cap Equity Fund, Vista Capital Growth Fund, Vista Growth and
Income Fund, Vista International Equity Fund and Vista Global Fixed Income Fund
(separately managed portfolios of Mutual Fund Group), and of our reports dated
December 15, 1995, relating to the financial statements of Capital Growth
Portfolio, Growth and Income Portfolio, International Equity Portfolio and
Global Fixed Income Portfolio appearing in the Annual Reports, which are also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the heading "Financial Highlights" in the
Prospectuses and under the heading "Independent Accountants" in the Statements
of Additional Information.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
April 11, 1996
Independent Auditors' Consent
To the Shareholders and Board of Directors
of The Hanover Investment Funds, Inc.:
We consent to the use of our report dated January 19, 1996 with respect to The
Hanover U.S. Government Securities Fund and The Hanover American Value Fund
incorporated herein by reference and to the references to our Firm under the
heading "Financial Highlights" in the Prospectuses and "Independent Accountants"
in the Statement of Additional Information.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New York, New York
April 19, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> BALANCED FUND-CLASS A
</LEGEND>
<CIK> 0000814078
<NAME> BALANCED FUND-CLASS A
<SERIES>
<NUMBER> 021
<NAME> BALANCED FUND-CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 37,297,812
<INVESTMENTS-AT-VALUE> 39,853,325
<RECEIVABLES> 423,234
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40,276,559
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 208,027
<TOTAL-LIABILITIES> 208,027
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 36,517,465
<SHARES-COMMON-STOCK> 3,222,931
<SHARES-COMMON-PRIOR> 2,279,107
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 995,554
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,555,513
<NET-ASSETS> 40,068,532
<DIVIDEND-INCOME> 291,935
<INTEREST-INCOME> 1,027,055
<OTHER-INCOME> 0
<EXPENSES-NET> 344,258
<NET-INVESTMENT-INCOME> 974,732
<REALIZED-GAINS-CURRENT> 1,024,866
<APPREC-INCREASE-CURRENT> 2,769,570
<NET-CHANGE-FROM-OPS> 3,794,436
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 986,430
<DISTRIBUTIONS-OF-GAINS> 302,310
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,367,137
<NUMBER-OF-SHARES-REDEEMED> 533,962
<SHARES-REINVESTED> 110,649
<NET-CHANGE-IN-ASSETS> 14,821,134
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 284,696
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 145,295
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 665,449
<AVERAGE-NET-ASSETS> 29,053,000
<PER-SHARE-NAV-BEGIN> 11.09
<PER-SHARE-NII> .382
<PER-SHARE-GAIN-APPREC> 1.517
<PER-SHARE-DIVIDEND> .408
<PER-SHARE-DISTRIBUTIONS> .131
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.45
<EXPENSE-RATIO> 1.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> BALANCED FUND-CLASS B
</LEGEND>
<CIK> 0000814078
<NAME> BALANCED FUND-CLASS B
<SERIES>
<NUMBER> 022
<NAME> BALANCED FUND-CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 37,297,812
<INVESTMENTS-AT-VALUE> 39,853,325
<RECEIVABLES> 423,234
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40,276,559
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 208,027
<TOTAL-LIABILITIES> 208,027
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 36,517,465
<SHARES-COMMON-STOCK> 3,222,931
<SHARES-COMMON-PRIOR> 2,279,107
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 995,554
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,555,513
<NET-ASSETS> 40,068,532
<DIVIDEND-INCOME> 291,935
<INTEREST-INCOME> 1,027,055
<OTHER-INCOME> 0
<EXPENSES-NET> 344,258
<NET-INVESTMENT-INCOME> 974,732
<REALIZED-GAINS-CURRENT> 1,024,866
<APPREC-INCREASE-CURRENT> 2,769,570
<NET-CHANGE-FROM-OPS> 3,794,436
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 986,430
<DISTRIBUTIONS-OF-GAINS> 302,310
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,367,137
<NUMBER-OF-SHARES-REDEEMED> 533,962
<SHARES-REINVESTED> 110,649
<NET-CHANGE-IN-ASSETS> 14,821,134
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 284,696
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 145,295
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 665,449
<AVERAGE-NET-ASSETS> 29,053,000
<PER-SHARE-NAV-BEGIN> 11.03
<PER-SHARE-NII> .309
<PER-SHARE-GAIN-APPREC> 1.502
<PER-SHARE-DIVIDEND> .131
<PER-SHARE-DISTRIBUTIONS> .35
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.36
<EXPENSE-RATIO> 1.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> BOND FUND
</LEGEND>
<CIK> 0000814078
<NAME> BOND FUND
<SERIES>
<NUMBER> 091
<NAME> BOND FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 54,036,652
<INVESTMENTS-AT-VALUE> 56,761,106
<RECEIVABLES> 1,092,658
<ASSETS-OTHER> 428
<OTHER-ITEMS-ASSETS> 51,131
<TOTAL-ASSETS> 57,905,323
<PAYABLE-FOR-SECURITIES> 498,350
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 122,082
<TOTAL-LIABILITIES> 620,432
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 54,263,503
<SHARES-COMMON-STOCK> 5,252,642
<SHARES-COMMON-PRIOR> 5,202,034
<ACCUMULATED-NII-CURRENT> 6,900
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 290,034
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,724,454
<NET-ASSETS> 57,284,891
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,724,412
<OTHER-INCOME> 0
<EXPENSES-NET> 167,830
<NET-INVESTMENT-INCOME> 3,556,582
<REALIZED-GAINS-CURRENT> 330,075
<APPREC-INCREASE-CURRENT> 4,034,751
<NET-CHANGE-FROM-OPS> 4,364,826
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,546,956
<DISTRIBUTIONS-OF-GAINS> 122,330
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 414,161
<NUMBER-OF-SHARES-REDEEMED> 698,335
<SHARES-REINVESTED> 334,782
<NET-CHANGE-IN-ASSETS> 4,845,818
<ACCUMULATED-NII-PRIOR> (2,726)
<ACCUMULATED-GAINS-PRIOR> 82,289
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 162,618
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 472,139
<AVERAGE-NET-ASSETS> 54,143,000
<PER-SHARE-NAV-BEGIN> 10.08
<PER-SHARE-NII> .687
<PER-SHARE-GAIN-APPREC> .854
<PER-SHARE-DIVIDEND> .687
<PER-SHARE-DISTRIBUTIONS> .024
<RETURNS-OF-CAPITAL> .00
<PER-SHARE-NAV-END> 10.91
<EXPENSE-RATIO> .310
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> CAP GROWTH FUND-CLASS A
</LEGEND>
<CIK> 0000814078
<NAME> CAP GROWTH FUND-CLASS A
<SERIES>
<NUMBER> 051
<NAME> CAP GROWTH FUND-CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 2,500,018
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1,017,602,669
<TOTAL-ASSETS> 1,020,102,687
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12,151,706
<TOTAL-LIABILITIES> 12,151,706
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 866,852,584
<SHARES-COMMON-STOCK> 28,325,717
<SHARES-COMMON-PRIOR> 20,954,541
<ACCUMULATED-NII-CURRENT> 340,988
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 37,430,396
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 103,327,013
<NET-ASSETS> 1,007,950,981
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 13,568,832
<EXPENSES-NET> 9,876,466
<NET-INVESTMENT-INCOME> 3,692,366
<REALIZED-GAINS-CURRENT> 37,651,492
<APPREC-INCREASE-CURRENT> 81,591,993
<NET-CHANGE-FROM-OPS> 119,243,485
<EQUALIZATION> 245,128
<DISTRIBUTIONS-OF-INCOME> 4,273,755
<DISTRIBUTIONS-OF-GAINS> 15,178,282
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 41,229,572
<NUMBER-OF-SHARES-REDEEMED> 34,452,211
<SHARES-REINVESTED> 593,815
<NET-CHANGE-IN-ASSETS> 334,316,798
<ACCUMULATED-NII-PRIOR> 898,825
<ACCUMULATED-GAINS-PRIOR> 15,011,376
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,992,748
<AVERAGE-NET-ASSETS> 871,389,000
<PER-SHARE-NAV-BEGIN> 32.17
<PER-SHARE-NII> .189
<PER-SHARE-GAIN-APPREC> 4.16
<PER-SHARE-DIVIDEND> .189
<PER-SHARE-DISTRIBUTIONS> .676
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 35.65
<EXPENSE-RATIO> 1.51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> CAP GROWTH FUND-CLASS B
</LEGEND>
<CIK> 0000814078
<NAME> CAP GROWTH FUND-CLASS B
<SERIES>
<NUMBER> 052
<NAME> CAP GROWTH FUND-CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 2,500,018
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1,017,602,669
<TOTAL-ASSETS> 1,020,102,687
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12,151,706
<TOTAL-LIABILITIES> 12,151,706
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 866,852,584
<SHARES-COMMON-STOCK> 28,325,717
<SHARES-COMMON-PRIOR> 20,954,541
<ACCUMULATED-NII-CURRENT> 340,988
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 37,430,396
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 103,327,013
<NET-ASSETS> 1,007,950,981
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 13,568,832
<EXPENSES-NET> 9,876,466
<NET-INVESTMENT-INCOME> 3,692,366
<REALIZED-GAINS-CURRENT> 37,651,492
<APPREC-INCREASE-CURRENT> 81,591,993
<NET-CHANGE-FROM-OPS> 119,243,485
<EQUALIZATION> 245,128
<DISTRIBUTIONS-OF-INCOME> 4,273,755
<DISTRIBUTIONS-OF-GAINS> 15,178,282
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 41,229,572
<NUMBER-OF-SHARES-REDEEMED> 34,452,211
<SHARES-REINVESTED> 593,815
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<LEGEND> EQUITY INCOME FUND
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<NAME> EQUITY INCOME FUND
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<NUMBER> 031
<NAME> EQUITY INCOME FUND
<MULTIPLIER> 1
<S> <C>
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<CIK> 0000814078
<NAME> EQUITY FUND
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<NUMBER> 081
<NAME> EQUITY FUND
<MULTIPLIER> 1
<S> <C>
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<TABLE> <S> <C>
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<LEGEND> GROWTH & INCOME FUND-CLASS A
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<CIK> 0000814078
<NAME> GROWTH & INCOME FUND-CLASS A
<SERIES>
<NUMBER> 041
<NAME> GROWTH & INCOME FUND-CLASS A
<MULTIPLIER> 1
<S> <C>
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<PERIOD-END> OCT-31-1995
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<TABLE> <S> <C>
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<LEGEND> GROWTH & INCOME FUND-CLASS B
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<NAME> GROWTH & INCOME FUND-CLASS B
<SERIES>
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<NAME> GROWTH & INCOME FUND-CLASS B
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<S> <C>
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<LEGEND> GLOBAL FIXED INCOME FUND-CLASS A
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<CIK> 0000814078
<NAME> GLOBAL FIXED INCOME FUND-CLASS A
<SERIES>
<NUMBER> 071
<NAME> GLOBAL FIXED INCOME FUND-CLASS A
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<S> <C>
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<LEGEND> GLOBAL FIXED INCOME FUND-CLASS B
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<NAME> GLOBAL FIXED INCOME FUND-CLASS B
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<NAME> GLOBAL FIXED INCOME FUND-CLASS B
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<CIK> 0000814078
<NAME> IEEE BALANCED FUND
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<NUMBER> 111
<NAME> IEEE BALANCED FUND
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<S> <C>
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<NAME> INTERNATIONAL EQUITY FUND-CLASS A
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<NAME> INTERNATIONAL EQUITY FUND-CLASS A
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> INTERNATIONAL EQUITY FUND-CLASS B
</LEGEND>
<CIK> 0000814078
<NAME> INTERNATIONAL EQUITY FUND-CLASS B
<SERIES>
<NUMBER> 062
<NAME> INTERNATIONAL EQUITY FUND-CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-END> OCT-31-1995
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<OTHER-INCOME> 378,201
<EXPENSES-NET> 447,384
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<NUMBER-OF-SHARES-SOLD> 2,174,447
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<GROSS-EXPENSE> 642,035
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<PER-SHARE-NAV-BEGIN> 12.23
<PER-SHARE-NII> (.026)
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> SMALL CAP EQUITY FUND-CLASS A
</LEGEND>
<CIK> 0000814078
<NAME> SMALL CAP EQUITY FUND-CLASS A
<SERIES>
<NUMBER> 121
<NAME> SMALL CAP EQUITY FUND-CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
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<PAID-IN-CAPITAL-COMMON> 57,768,327
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<ACCUMULATED-NET-GAINS> 996,627
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<ACCUM-APPREC-OR-DEPREC> 6,598,340
<NET-ASSETS> 65,363,294
<DIVIDEND-INCOME> 97,606
<INTEREST-INCOME> 310,044
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<EXPENSES-NET> 349,431
<NET-INVESTMENT-INCOME> 58,219
<REALIZED-GAINS-CURRENT> 1,003,383
<APPREC-INCREASE-CURRENT> 6,598,340
<NET-CHANGE-FROM-OPS> 7,601,723
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<DISTRIBUTIONS-OF-INCOME> 58,219
<DISTRIBUTIONS-OF-GAINS> 6,756
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<NUMBER-OF-SHARES-SOLD> 4,550,484
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<SHARES-REINVESTED> 4,675
<NET-CHANGE-IN-ASSETS> 65,363,294
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 130,401
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 573,472
<AVERAGE-NET-ASSETS> 24,144,000
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .060
<PER-SHARE-GAIN-APPREC> 5.056
<PER-SHARE-DIVIDEND> .042
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<PER-SHARE-NAV-END> 15.07
<EXPENSE-RATIO> 1.510
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> SMALL CAP EQUITY FUND-CLASS B
</LEGEND>
<CIK> 0000814078
<NAME> SMALL CAP EQUITY FUND-CLASS B
<SERIES>
<NUMBER> 122
<NAME> SMALL CAP EQUITY FUND-CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
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<INVESTMENTS-AT-VALUE> 62,144,814
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<PAID-IN-CAPITAL-COMMON> 57,768,327
<SHARES-COMMON-STOCK> 4,342,949
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<ACCUMULATED-NET-GAINS> 996,627
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<ACCUM-APPREC-OR-DEPREC> 6,598,340
<NET-ASSETS> 65,363,294
<DIVIDEND-INCOME> 97,606
<INTEREST-INCOME> 310,044
<OTHER-INCOME> 0
<EXPENSES-NET> 349,431
<NET-INVESTMENT-INCOME> 58,219
<REALIZED-GAINS-CURRENT> 1,003,383
<APPREC-INCREASE-CURRENT> 6,598,340
<NET-CHANGE-FROM-OPS> 7,601,723
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<DISTRIBUTIONS-OF-INCOME> 58,219
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<NUMBER-OF-SHARES-SOLD> 4,550,484
<NUMBER-OF-SHARES-REDEEMED> 212,210
<SHARES-REINVESTED> 4,675
<NET-CHANGE-IN-ASSETS> 65,363,294
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<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 130,401
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 573,472
<AVERAGE-NET-ASSETS> 24,144,000
<PER-SHARE-NAV-BEGIN> 11.39
<PER-SHARE-NII> (.018)
<PER-SHARE-GAIN-APPREC> 3.669
<PER-SHARE-DIVIDEND> .027
<PER-SHARE-DISTRIBUTIONS> .004
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.01
<EXPENSE-RATIO> 2.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> SHORT-TERM BOND FUND
</LEGEND>
<CIK> 0000814078
<NAME> SHORT-TERM BOND FUND
<SERIES>
<NUMBER> 101
<NAME> SHORT-TERM BOND FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 35,420,430
<INVESTMENTS-AT-VALUE> 35,585,381
<RECEIVABLES> 754,202
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<OTHER-ITEMS-ASSETS> 60
<TOTAL-ASSETS> 36,340,196
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<OTHER-ITEMS-LIABILITIES> 9,779
<TOTAL-LIABILITIES> 9,779
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 36,437,682
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<SHARES-COMMON-PRIOR> 3,630,843
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<ACCUMULATED-NET-GAINS> (398,582)
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<ACCUM-APPREC-OR-DEPREC> 164,951
<NET-ASSETS> 36,245,748
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,956,373
<OTHER-INCOME> 0
<EXPENSES-NET> 109,154
<NET-INVESTMENT-INCOME> 1,847,219
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<NUMBER-OF-SHARES-SOLD> 786,229
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<ACCUMULATED-GAINS-PRIOR> (391,869)
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<GROSS-ADVISORY-FEES> 85,353
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 306,465
<AVERAGE-NET-ASSETS> 34,139,000
<PER-SHARE-NAV-BEGIN> 9.91
<PER-SHARE-NII> .542
<PER-SHARE-GAIN-APPREC> .168
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<PER-SHARE-NAV-END> 10.08
<EXPENSE-RATIO> .32
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> U.S. GOVERNMENT INCOME FUND-CLASS A
</LEGEND>
<CIK> 0000814078
<NAME> U.S. GOVERNMENT INCOME FUND-CLASS A
<SERIES>
<NUMBER> 011
<NAME> U.S. GOVERNMENT INCOME FUND-CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
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<PER-SHARE-NAV-BEGIN> 10.60
<PER-SHARE-NII> .699
<PER-SHARE-GAIN-APPREC> .798
<PER-SHARE-DIVIDEND> .697
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<PER-SHARE-NAV-END> 11.40
<EXPENSE-RATIO> .87
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> U.S. GOVERNMENT INCOME FUND-CLASS B
</LEGEND>
<CIK> 0000814078
<NAME> U.S. GOVERNMENT INCOME FUND-CLASS B
<SERIES>
<NUMBER> 012
<NAME> U.S. GOVERNMENT INCOME FUND-CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000814078
<NAME> CAPITAL GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> GLOBAL FIXED INCOME PORTFOLIO
</LEGEND>
<CIK> 0000814078
<NAME> GLOBAL FIXED INCOME PORTFOLIO
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> INTERNATIONAL EQUITY PORTFOLIO
</LEGEND>
<CIK> 0000895535
<NAME> INTERNATIONAL EQUITY PORTFOLIO
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<CIK> 0000913829
<NAME> GROWTH & INCOME PORTFOLIO
<S> <C>
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